Paytm came to know that some users were using the platform to get free credit by using credit cards to fill up the wallet and then transferring that money back into their bank accounts.
“Some financially savvy users exploited this model to rotate money. This may surprise normal users like most of us but for a savvy user it meant freebies at Paytm’s cost,”
Usually, credit cards companies charge a hefty amount for cash withdrawals. It is variable for different companies but for example HDFC Bank charges a transaction fee of minimum Rs 300 or 2.5 percent, whichever is greater, on the amount withdrawn.
1) Add money to any mobile wallet like Paytm etc using a credit card.
2) Enter account details where you want to transfer the money from the wallet. This way one can bypass the heavy fee credit cards charged on cash withdrawals.
This sort of became a hassle free loan where absolutely no document or application was required.
While this may sound as a cool hack to avoid paying a hefty fee, there are many ways in which it can backfire and land the user in trouble.
For users who spend more than Rs 2 lakh annually on their credit cards, banks have to report them to the income tax authorities. An excessive exploitation of this loophole can land you a call from the taxmen, which might not be so pleasant.
A transaction made on a credit card is liable to be paid when the monthly bill is generated, if you default, a fine along with interest at a rate of 3-4 percent per month will be levied on the outstanding amount which cost more than getting credit from a legitimate route.
Paytm Payments Bank will continue to offer paytm wallet. In addition, current accounts for businesses and interest bearing savings accounts for individuals will be offered by bank. It will also enable you to access a range of financial services such as insurance, loans, Mutual Funds offered by our partners with the seamless Paytm experience.
Most people want to know the balance on home screen when they open Paytm app and don't want to waste time to see it after 2-3 clicks. Why can't Paytm team provide option to display it on home screen? Those who don't want to see the balance on home screen, let them disable the option. It is irony that no.1 wallet provider does not have this basic stuff.