This fee is an expense that a business pays each time it processes a customer's electronic transaction. It ranges from 0.5% to 1.75%, depending on the merchant service provider.
BENGALURU: Mobile wallet and ecommerce firm Paytm has done away with 'per transaction fee' for consumer-to-merchant offline wallet transactions in a bid to boost digital money transfer on the platform.
"Often these charges discourage a merchant to accept a digital transaction and they end up asking the consumer to bear the cost, which is illegal," said Nitin Misra, payment products head at Paytm. "By eliminating this cost, we are looking at an opportunity to digitise that 95% of India which still deals in cash," he added.
According to a report by India Development Fund and Internet and Mobile Association of India, only 3.6% households in the country undertake cashless transactions. It cited poor acceptance of digital money by sellers and lack of awareness about cashless systems/options as the two main reasons for such low penetration.
Sanjay Swamy, managing partner at venture capital firm Prime Venture Partners said transaction rates will come down as the world is moving towards real time payments. "These are early days for such initiatives but eventually this will all play out," he added.
Mobile wallet is a virtual wallet through which a customer can preload money and use it to pay for services without undergoing the two-way authentication process. As per the RBI norms, a consumer can add up to Rs 10,000 in a m-wallet in a calender month. Under peer-to-peer and peer-to-bank payments, the wallet holder cannot add more than Rs 25,000 a month. As merchants do more business than the set amount, they are not bound by such limitations. Adding on to this, Paytm has come out with merchant account wallet where no transaction fee is charged.
Alibaba-backed Paytm has been taking various measures to make digital payments "an infrastructure light model".
Recently, it rolled out a code-based payment option in its mobile application to enable any shopkeeper or auto driver with a Paytm account to receive payments by allowing wallet-holders to scan a pre-printed QR code using the app. Currently, the company is working on a 'sound pay' feature to enable money transfers on the app.
"We have crossed credit card transactions and today 95 out of 100 wallets are Paytm," said Misra. "In our business, I think we have reached a sweet spot. We have a payment business, we have a marketplace and now soon we will have a payments bank. So we do not have any competitor," he added.
According to the company, Paytm is the country's largest mobile payments platform, having clocked 120 million wallet transactions and having nearly 150,000 merchants on board.
It is expected to start the payment bank business by June.