Paytm recently uncovered a fraud of more than 10crore cashback, and has fired many employees and delisted hundreds of sellers. When they first realised that there was something fishy about the large percentage of cash backs to merchants, they hired Ernst & Young to conduct a deeper audit and were shocked to see that many merchants collaborated with junior employees to collect big cashbacks.
Although removing so many merchants and sellers from the company may cause slight deterrence to the product, Head Vijay Sharma said that this will create a better consumer platform, with better standards for buyers as well.
Paytm’s cashback model claims to be sustainable, though it is not currently earning any profits, as they are busy collecting merchants and sellers for the platform. However, Paytm reported a loss of over 1,500 cr in 2016 and is not likely to make profit this year either.
What do you think? Will the cash back idea work, or will it result in bankruptcy of Paytm? Comment down below…