Paytm cashback fraud worth Rs 10 crore: Paytm employees conspire with sellers to create fake orders, sacked

Paytm has discovered over Rs 10 crore fraud following an internal audit into a large percent of cashbacks earned by small merchants. As a result, Paytm has de-listed hundreds of sellers and many of its employees.

"After Diwali, what my team saw was that re were some small sellers who were getting large percent of cashbacks and I we as a team asked our auditors to do a deeper audit," Paytm CEO Vijay Shekhar Sharma said.

Paytm engd consultancy firm EY to conduct audit and discovered something very shocking: Some Paytm employees were helping se sellers earn cashbacks.

overall size of fraud is in "double digits", which is "Rs 10 crore for sure", and actions against wrongdoers are being taken, Sharma said.

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Paytm is w cracking down on se sellers and de-listing m to ensure re are only brand sellers on platform and t "mom-and-pop shops", Sharma ded. "Tens" of Paytm employees have also been sacked.

While number of sellers would reduce, such stringent actions will ensure "better ecosystem" for consumers, Sharma said.

According to reports, some Paytm employees allegedly worked with third-party vendors and created fake orders to siphon off cashback offers.

dressing criticism over cashback model making business unfeasible, Sharma said business is "sustainable" but profitability may be some time away as it is spending more on onboarding users and merchants currently

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"Paytm is actually net concluding positive, net of cashback, marketing promotions operating costs," he said, ding that it would t be profitable till its user base reaches 500 million from 300 million and merchant base swells to 40 million from current 12 million.

Sharma said Paytm earns both through merchant discount rate paid for processing transactions and may get up to 15 per cent of cover charge when a transaction like a movie ticket sale happens.

Sharma also hinted that Paytm is t on lookout for any fresh capital when asked about valuations for next round of funding. Sharma ded that Paytm continues to carry a war chest of money necessary for two years of growth.

(With PTI inputs)