Ever since the government banned banks from levying transaction charges on debit and credit card transactions, mobile wallets and digital payment startups like Paytm have been gaining in popularity. However, the country’s largest e-commerce site, Flipkart-owned Paytm, has been losing out on millions of dollars every month because of this fee ban and today, Paytm decided to do something about it. It now plans to take up to 6% ‘surcharge’ on certain mobile recharges done through its platform in order to break even, according to reports. No More Free Recharges Paytm Starts Taking Surcharge on Mobile Recharges

What are surcharges?

A mobile surcharge is a hidden fee that some mobile phone companies and service providers charge for particular services or to use a certain plan. For example, if you’re making an international call, you may be charged extra for it. While these fees may vary from company to company, they’re often called surcharges and are also known as per-use charges, connection fees or termination fees. In many cases they are only applied when you exceed your monthly limits; so while one provider might allow unlimited calls to Canada in their regular plan, another might charge a surcharge of 3 cents every time you dial a Canadian number beyond your normal limit of 15 minutes per month. These additional charges can quickly add up if you aren’t paying attention — or have forgotten about them entirely.

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Why companies use them

The problem with cashbacks is that most of them don’t actually help you save much money—and they might even cost you more in premiums than you get back. For example, if a card pays 2% cashback, you have to spend $100 to earn $2.

No More Free Recharges Paytm Starts Taking Surcharge on Mobile Recharges
No More Free Recharges Paytm Starts Taking Surcharge on Mobile Recharges

In other words, it’s costing you an extra $98 per year to use that card. That’s less than a latte at Starbucks per month; consider paying for your caffeine with a different credit card instead.

How do surcharges work?

In a nutshell, surcharge is an additional fee that you will have to pay to your service provider. For example, say you are paying Rs 100 for 1GB of data. If there is a 5% surcharge, you will actually be paying Rs 105 for 1GB of data. As mentioned above, it’s a very common practice in India and has been prevalent ever since Reliance Jio entered India’s telecom market and forced other players to slash their rates. They all realized that they were losing customers who were willing to pay slightly more for better services—and so started adding surcharges too.

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How can you avoid paying the surcharge?

Are you looking for an alternative to mobile recharges with no surcharge? PhonePe is a service run by Flipkart, which also owns Myntra and Jabong. Like Paytm, it’s a digital wallet app that offers online shopping payment facilities.

No More Free Recharges! Paytm Starts Taking Surcharge on Mobile Recharges
No More Free Recharges Paytm Starts Taking Surcharge on Mobile Recharges

You can recharge your number through it as well. The best part: there are no surcharges while recharging through PhonePe. It charges an additional Rs 10 (plus taxes) but that is still less than what other wallet apps charge. To get started, download PhonePe app from Google Play store or App Store. Once installed, open the app and add money via bank account/credit card/debit card etc., or choose to add cash at any of their 35000 offline stores across India!

The Verdict

As of April 12, 2017, Paytm no longer provides free recharges. Instead, they will add a surcharge to mobile phone recharge done through their app. This means that you will have to pay an extra amount over and above your prepaid or postpaid plans rates when you recharge using Paytm App. However, if you use any other form of payment like credit card or net banking to recharge your mobile number then you can continue to get free recharges without any additional charges for at least another two months (as per latest update) as there is no statement from Ola and Flipkart about them charging extra for recharging via other payment modes.

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