Starting July 1, 2019, Paytm will start passing on the Merchant Discount Rate (MDR) charges to consumers. MDR is the charge that banks and card companies levy for digital transactions. So far, since inception, Paytm had been absorbing these charges and not charging consumers for it. This would mean an increase in transaction cost for consumers transacting on Paytm from today.

MDR amounts to 1% for payments through credit cards, 0.9% for debit card transactions and Rs 12-15 for transactions done through UPI and net banking. Paytm will now start charging these fees from the consumers.

SoftBank and Alibab backed Paytm will levy these charges on all digital payments including topping up of Paytm wallet, paying school fees, utility bills and buying movie tickets.

Sources associated with Paytm said that every transaction was currently a cost on Paytm and they are only passing on the MDR that is being charged by banks and card companies on to them. Paytm will not levy any convenience fees on the same.

While it is expected that Paytm might lose a set of customers because of this but experts feel that this move will only help Paytm in the long run. Paytm has been burning a lot of cash since its inception and needed mechanism to turn profitable.

Update: Paytm refutes media reports about levying additional charges