Paytm has scrapped its transaction fee for its consumer-to-merchant offline wallets with an aim to encourage digital money transfer on its platform.
Each time the business processes the customer’s transaction online, it has to pay a transaction fee. This fee ranges from 0.5% – 0.75% according to the services provided by the merchant.
The payment products head, Nitin Misra said that often such fee discourages the merchants to make a digital transaction and thus they end up asking the consumer to bear the cost illegally. By scrapping this fee, the company is looking for an opportunity to digitise the balance 95% of India that transacts in cash.
On this Paytm’s initiative, a payments expert said that this is a much-needed push for a cash intensive country like India. He added that RBI should lower the transaction fee, as the idea of digitising cash and then charging for it does not match.
Only 3.6% of the households in the country carry out digital transactions according to a report by Internet Mobile Association and India Development Fund. Lack of awareness about cashless options and poor acceptance of the digital money are considered as the two important reasons for such low penetration.