What is the scam behind cash back offer in Paytm?

Paytm Cash latest avatar of Paytm Cashback, is it a scam?


Paytm Cash latest avatar of Paytm Cashback, is it a scam?

Cashback on online purchases is into trend these days. Online shopping portals like Paytm often lure the customers with some attractive cashback offers. Even apps like Magicpin increase their user base by giving a percentage of the total bill as cashback. Talking about Paytm, it often gives lucrative cashback on online shopping, booking tickets, and on recharge of mobile phones. Sometimes, it even ranges from 50% to 100%. Believe it or not, but it actually happens sometimes. Now the question is, why does it give back the money just like that? Is there any scam behind such cashback offers in Paytm?

1000-paytm-cashPeople sometimes complain that they applied the coupons, made the transaction, and never received the cashback. This may tempt us to think that it is actually a scam. However, it may not be the case actually. Let’s understand as to why these e-commerce companies give cash back in the first place. Firstly, because due to increased digitalization, there has been a cut-throat competition between e-commerce companies like Flipkart, Amazon, Myntra. It is hard to retain the customers when they have so many options just a click away.

Any e-commerce company works on the principle of “Winner Takes it All” which in other words means that down the line there will be only one giant in the space of online shopping and all others will be decimated. For e.g. Amazon in US and Alibaba in China. The fight for the super spot in India is still on amongst players like Flipkart, Amazon and now Paytm. With a growing trend of online marketing in India and further development of Tier 2 and Tier 3 cities, e-commerce holds massive returns to the players in a comparatively shorter span of time.

paytmmallE-commerce giants in the competitions have resorted to offering freebies in the form of huge cash discounts. Paytm has had a hard time selling products due to the omnipresence of Amazon, Flipkart, Myntra and Jabong who deliver quality products with fast service and a good customer base online. And therefore to counter this and stay in the competition Paytm has followed a model of No Profit No loss till the time they become established, Winner. The profit they earn –  Paytm Cash Back Offers – is shared with the customers and helps Paytm to build a strong, loyal customer base somewhat similar to the strategy of Jio. The losses, if any, are borne by anchor investors of Paytm like Alibaba. Paytm is funded by Chinese company Alibaba from Jack Ma @Rs. 970 crores approx with the aim to penetrate the growing Indian market by 2020.

How Paytm CashBack Offer works and is it Win-Win for both Paytm and Customer?

Paytm Customer NumberNow let us try to understand how the Paytm CashBack Offers work – Any cashback discount on a product does not mean that we get cash in hand on the purchase and neither there is a reduction in cost price. It implies that the Paytm Cashback offer, when availed, adds the cash back amount in your account which you can use at the time of next purchase on Paytm only. This turns out a win-win situation of the giant Paytm and for the customer. Paytm succeeds in luring, retaining the customer and pushing them to buy more from their website. For the customer, it is a win because he needs to spend less on the product.

Note : For some users who after reading the above article find that they are not getting the cashback despite using the right coupon code and doing the transactions as required. The answer is that Paytm follows the mandatory KYC rules instructed by Reserve Bank Of India. And to make the customers do KYC, it has laid down the rule that only the users who have done the KYC will get the cashback. Hurry up and get KYC done to avail the benefits.

We hope that this section was useful to you!

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