[srimath]

Originally Posted by Ry_der

Just sharing a hack.

Suppose you have a credit card with a limit of 1.0 lacs. You have utilised 20000 Rs during the month. You still have 0.8 lacs in your card. For paying this 20000 amount you have generally 2 choices.
1. Pay the minimum bill amount and pay monthly interest on the balance.
2. Convert it into EMI and still pay some premium for converting as well as interest.

But there is another way of getting out of this without paying any interest or charges.

Step.1 Topup your PAYTM wallet using Rs. 20K from your CC.

Step2. Transfer the amount to your bank account from PAYTM.

Step3. Pay your credit card bill from your bank account.

So basically you will be repaying the bill from the card itself. You can reduce the amount by a fraction in each cycle. That will be your EMI without any interest or premium.

You can also withdraw cash by this route rather withdrawing from your credit card and paying a cash premium.

You can show the withdrawl amount as an unsecured/secured loan(depends upon your credit card type) in your balance sheet.

Thanks.

Rotating money is termed illegal by the T&C of paytm and may result in your credit card getting blocked for use on paytm.

https://blog.paytm.com/unable-to-add...y-cf69f452d2ff

[dailydriver]

Originally Posted by Ry_der

Just sharing a hack.

This hack treads a fine line between the two sides of personal finanacial ethics and is best avoided.

Paytm had earlier this year suspended/blocked the cards/accounts of a number of its customers who had indulged in such practices. It had, for a while, even brought back the 2% charges levied on credit card transactions in order to discourage such hacks.

https://blog.paytm.com/announcing-fe...t-e85f3761f17d

https://blog.paytm.com/we-will-intro...y-4c59fbfe017f

A report in TOI elaborated on this:

Paytm on Wednesday said it has blocked credit cards of public and private banks after it realised that financially savvy merchants and bank staff were exploiting their discounts to rotate cash for free credit and loyalty points. Paytm in a lengthy blog post described how users started funding their Paytm wallet with their credit cards and transferring it to their bank accounts for free.

They were not only getting free loyalty points, which is in effect free cash but also access to free credit. We were really shocked and disgusted, when we realised what was happening. And we have blocked the cards of users, who were using this loophole in the system to their advantage," said Vijay Shekhar Sharma, CEO, Paytm to TOI over phone. "It was so uncanny, when we realised bank executives were doing this with the help of their friends and family . A normal merchant -say a chaiwallah -who is dealing with payments of Rs 50-Rs 200 would never think of this. But it takes a member of the banking fraternity to figure out that you can make an interest on Rs 10,000 swiped off your credit card," said Sharma. Problem arose when Paytm launched a platform for small merchants at 0% fee in November.

Source:http://timesofindia.indiatimes.com/c...w/57548855.cms

[Ry_der]

Originally Posted by srimath

Rotating money is termed illegal by the T&C of paytm and may result in your credit card getting blocked for use on paytm.

https://blog.paytm.com/unable-to-add...y-cf69f452d2ff

As far as I know,it cant be termed illegal. They just updated their t&c and the cards blocked might be the ones who paid the bill directly from PAYTM otherwise PAYTM can never have the information about this kind of balance rotation because of a third party involved i.e. bank.

Still there are so many e-wallets available to practice this hack(freecharge etc.). Freechage asks you to wait for 2 days before transfering the same into your bank account. Its just to save some bucks not for earning profits.

[SilentEngine]

Originally Posted by Ry_der

As far as I know,it cant be termed illegal. They just updated their t&c and the cards blocked might be the ones who paid the bill directly from PAYTM otherwise PAYTM can never have the information about this kind of balance rotation because of a third party involved i.e. bank.

Still there are so many e-wallets available to practice this hack(freecharge etc.). Freechage asks you to wait for 2 days before transfering the same into your bank account. Its just to save some bucks not for earning profits.

It may not be illegal yet, but it's certainly unethical if one is doing this regularly. It's certainly not in PayTM or any mobile wallet provider's interest to allow this to go on for ever. It will be interesting to know credit card providers perspective on this. Are they happy with this given that they earn their share via the transaction fees?

Before demonetization, there used to be 4% charge on withdrawal to the bank account. Then they made it free for everyone. Right way to go is to have some kind of fee on either adding money to wallet via credit cards or on withdrawal. Personally i think, in the long run this concept of "loading money" with wallet will die down. A truly mobile wallet shouldn't require you to load money before hand.

[binand]

Originally Posted by SilentEngine

It may not be illegal yet, but it's certainly unethical if one is doing this regularly.

And yet, some others would call this sort of thing "brilliant", this person a "genius" and tell them it was a job "well done".

http://sploid.gizmodo.com/genius-man...eat-1510242296

Personally speaking - I think the existence of the loophole is a mistake on Paytm's part and taking advantage of it is not something to be condemned. Now if there is actually a law that was broken here I'd think differently, but it appears there isn't.

[rkg]

Two days back, i had used my chip AMEX CC at Dominoes. First they inserted the card in chip card slot and then removed it and swiped it. The transaction went through with asking for PIN. Even though card has a PIN. Dominoes guys are telling it happens sometimes.
Whatever i have seen so far, POS terminal with chip card insert slot never allows card to be swiped. Here they first inserted in slot and then swiped.
How it could have happened without PIN?

[SilentEngine]

Originally Posted by binand

Personally speaking - I think the existence of the loophole is a mistake on Paytm's part and taking advantage of it is not something to be condemned. Now if there is actually a law that was broken here I'd think differently, but it appears there isn't.

On PayTM's defense, this loophole didn't exist when they had 4% withdrawal fee (or 1% for KYC compliant users) earlier. There were bigger loopholes elsewhere (Freecharge), but just that those didn't match up to the scale of PayTM.

Like most things with new technologies, it will take time for law to catch up to it. In this case i am not even sure if there can be a law made on this. More than the law, i think all the different links in the payments infrastructure (banks, card companies, wallets, gateway providers etc) should probably come up with their own deterrents to this practice.

Originally Posted by rkg

Two days back, i had used my chip AMEX CC at Dominoes. First they inserted the card in chip card slot and then removed it and swiped it. The transaction went through with asking for PIN. Even though card has a PIN. Dominoes guys are telling it happens sometimes.
Whatever i have seen so far, POS terminal with chip card insert slot never allows card to be swiped. Here they first inserted in slot and then swiped.
How it could have happened without PIN?

Was this a new card used for the first time? For Amex cards, the PIN is written to the card on first use (if you have set the PIN yourself online or sent from the bank).

[rkg]

Originally Posted by SilentEngine

Was this a new card used for the first time? For Amex cards, the PIN is written to the card on first use (if you have set the PIN yourself online or sent from the bank).

No. Card was in use since last four months. I knew about the first time use without PIN. Card was used sufficient times later on. every time with PIN only

[binand]

Originally Posted by SilentEngine

On PayTM's defense, this loophole didn't exist when they had 4% withdrawal fee (or 1% for KYC compliant users) earlier.

Right, so does that mean some MBA-type decided to reduce this 4% to 0% without thinking through the effect of such a move? Sounds like a bad appraisal and no bonus, if not a termination. :-)

[Ry_der]

Originally Posted by SilentEngine

On PayTM's defense, this loophole didn't exist when they had 4% withdrawal fee (or 1% for KYC compliant users) earlier. There were bigger loopholes elsewhere (Freecharge), but just that those didn't match up to the scale of PayTM.

The whole cycle is routed through banking channels. No cash is involved in the transaction and more importantly a person is rotating money between his own accounts( PAYTM, BANK and CC). I doubt any law is being broken. The credit cards are providing interest free windows for attracting cystomers, PAYTM also abolished the loading charges to attract customers and banks aren't authorised to levy charges on NEFT below Rs 1 Lakh.

Let me explain you with a reverse example: I have first transfered a sum of Rs 20000 into my credit card from my bank account. My credit card has now a credit balance of Rs. 20000. Now I repeat the cycle as stated in my first post, Am I doing anything different? No. But now atleast some of you will say its not wrong.


Its like a 4% discount sale, and if one purchases something from a sale how can it be illegal as long as the service provider is allowing this for promotion.

Originally Posted by SilentEngine

Like most things with new technologies, it will take time for law to catch up to it. In this case i am not even sure if there can be a law made on this. More than the law, i think all the different links in the payments infrastructure (banks, card companies, wallets, gateway providers etc) should probably come up with their own deterrents to this practice.

Eventually they will come up with an idea to protect these transactions but till then enjoy the loot.

NOTE: All members and guests:

Try the trick at your own risk. I have shared my opinion which may(not) be entirely correct.

[Oxy]

Originally Posted by Ry_der

Just sharing a hack.

20k is your current outstanding amount. Plus another 20k from the card goes to PayTM. So the total outstanding becomes 40k.

Even if you pay 20k through PayTM, you still need to pay the other 20k isn't it?

Or am I missing something?

[vinit.merchant]

Originally Posted by Oxy

20k is your current outstanding amount. Plus another 20k from the card goes to PayTM. So the total outstanding becomes 40k.

Even if you pay 20k through PayTM, you still need to pay the other 20k isn't it?

Or am I missing something?

The current 20k that goes to PayTM is in the current cycle, and hence will be due only in the next statement.

[Ry_der]

Originally Posted by Oxy

20k is your current outstanding amount. Plus another 20k from the card goes to PayTM. So the total outstanding becomes 40k.

Even if you pay 20k through PayTM, you still need to pay the other 20k isn't it?

Or am I missing something?

Yes. The last 20K will reflect in your next month's bill.

Let's assume the billing cycle is 18th to 17th. So you receive a credit card bill of Rs 20000 on 19th. Zero interest window is generally 20 days from the billing date after which you have to pay interest on the outstanding bill amount. Now if you do as I stated above, you clear your credit card bill for current month. This PAYTM 20K will reflect in your next bill. You paid no interest or charges. Its just deferred liability which you may keep reducing each month as per your financials.

Originally Posted by vinit.merchant

The current 20k that goes to PayTM is in the current cycle, and hence will be due only in the next statement.

Exactly. If you wish to avail an interest free short term loan.

[diyguy]

Originally Posted by Ry_der

You paid no interest or charges.

Isn't there a fee on Paytm to withdraw money to bank?
Similar thing was possible earlier (few years back) by booking train tickets and canceling them in advance when the deduction was not significant as today.

[binand]

Originally Posted by diyguy

Similar thing was possible earlier (few years back) by booking train tickets and canceling them in advance when the deduction was not significant as today.

I have been booking train tickets on credit cards ever since Railways introduced it back in 2002 or so. At no time did they have cash refunds on tickets booked with cards - the refund was always processed as a credit to the card account. The ticket would mention the card number and the statement "no cash refunds".

Probably not planned by MBA types. :-)