Tag: phonepe

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 percentage-in-point (pip) 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.



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UPI, Non-Cash Payments to Constitute 65 Percent of All Transactions by 2026: Report

Non-cash payments using modes like UPI will account for 65 percent of all the transactions by 2026 against the 40 percent level estimated at present, a report said on Thursday. The report — which comes amid a rapid rise in unified payments interface (UPI) since the onset of the COVID-19 pandemic over two years ago — also said that the digital payments industry will be $10 trillion (roughly Rs. 7,75,40,800 crore) opportunities by 2026 against $3 trillion (roughly Rs. 2,32,62,800 crore) at present.

Consultancy firm BCG and leading third-party UPI services provider Phonepe have come out with the report, which also projects that UPI adoption will surge to 75 percent of the population in the next five years from the 35 percent level at the end of FY21.

The consultancy’s managing director Prateek Roongta said merchant payments will drive the growth in adoption of non-cash or digital transactions to 65 percent from the present 40 percent levels.

The report estimated a seven-fold growth in merchant payments to $2.5-2.7 trillion (roughly Rs. 1,93,88,400 crore to Rs. 2,09,39,500 crore) by 2026 against the present $0.3-0.4 trillion (roughly Rs. 23,26,200 crore to Rs. 31,01,800 crore), which will drive the overall non-cash volumes growth.

“We will increasingly observe digital payments get embedded in all forms of commerce. We will also witness the progression from embedded payments to embedded finance. As more and more merchants begin to accept digital payments, it will unlock a significant change in access to credit for small merchants due to the creation of a digital transaction trail,” Roongta said.

The next wave of growth is likely to come from Tier 3-6 locations, as evidenced in the past two years wherein Tier 3-6 cities have contributed to nearly 60-70 percent of new mobile payment customers, the report said.

The report also advocated for a “sustainable merchant discount rate” to incentivise the players in the ecosystem and ensure that they are encouraged to drive merchant acquisition and push digital payments.

“Introducing an MDR of 0.2-0.3 percent of the transaction value for small tickets can allow banks, payment players and the overall ecosystem to run sustainable businesses,” according to the report.

It said the exponential rise in digital transactions is increasing pressure on bank systems, and the inability of some banks to handle demand spikes is a key reason for UPI transaction failures. As a solution, it is recommended banks to evaluate options outside core banking, including the cloud, as banking platforms have limited scalability and room to improve on service quality.

The report identified thin margins as a key challenge for players in the ecosystem, which leads them to transition to high-margin offerings like lending and investment facilitation.

This will lead to the emergence of super app ecosystems, where players have built a large captive customer base with access to rich customer data and purchasing behaviour patterns.

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