After PhonePe, Paytm Starts Taking Surcharge on Mobile Recharges

Paytm has started taking a surcharge for mobile recharges through its platform. The charge can be anywhere between Re. 1 and Rs. 6 — depending on the recharge amount. It is applicable on all Paytm mobile recharges, irrespective of the payment mode — whether done through Paytm Wallet balance or Unified Payments Interface (UPI) or bank credit or debit card. The update is notably not applicable to all users at this moment. Last year, Paytm competitor PhonePe started a pilot to charge a surcharge on mobile recharges.

According to user reports available on Twitter, Paytm started taking the surcharge as a convenience fee, though Gadgets 360 can now confirm that the additional charge is available as a platform fee. It appeared to be initially rolled out to a few users in late March. However, the sudden increase in the recent user reports suggest that the update is now applicable to a large number of users.

Gadgets 360 was able to independently verify that the surcharge is not applicable to all Paytm users at this moment. It is also important to note that the additional charge is applicable on transactions above Rs. 100.

Paytm is taking surcharge on mobile recharges from some users

However, the select users who have been considered as a part of the update need to pay up to Rs. 6 as an additional charge over and above the mobile recharge amount that they are paying through the Paytm app.

A person familiar with the development told Gadgets 360 that Paytm was taking the surcharge from some users as one of the experiments to grow its revenues.

In 2019, Paytm posted on Twitter to claim that it would not charge any convenience or transaction fee from customers on using any payment method which included cards, UPI, and wallet.

A query sent to Paytm didn't elicit a response at the time of publishing this article.

Similar to Paytm, PhonePe in October started charging a surcharge that it calls "processing fee" to customers for mobile recharges above Rs. 50. The Walmart-owned company at the time said that the charge was applicable under a "small-scale experience" and was not affecting all users.

User reports available on social media, though, indicate that the number of users seeing the additional charge on their PhonePe account is not minuscule as hundreds of users have reported that the platform is levying the additional charge for their mobile recharges.

Both PhonePe and Paytm have yet not officially revealed the criteria that they use to pick customers for charging the additional fee.

A PhonePe spokesperson declined to comment on queries around its criteria for the experiment and the total base of its users selected for the surcharge.

Payment Council of India (PCI) Chairman Vishwas Patel told Gadgets 360 that telcos in the country recently reduced commission to around 50 basis points (bips) on transactions to the online retailers. In addition to that, he noted that if a customer was paying through a credit card, where the merchant discount rate (MDR) is 1.8 percent, it was not possible for the online retailer to process recharges.

Nevertheless, platforms including Amazon Pay and Google Pay are not charging any additional charges for mobile recharges at this moment. Some of the price-conscious users are, therefore, moving their recharge tasks to these platforms for the time being.

Telecom operators including Airtel, Vi and Jio also support mobile recharges through their native apps. The surcharge by Paytm and PhonePe could, thus, be an opportunity for telcos to incline customers towards their solutions over time.