Paytm Mall said on Tuesday that the size of the recently detected cash back scam could be in the range of Rs 5-10 crore. The scam that is proving to be a PR disaster for the embattled e-commerce firm is currently being investigated by the accounting major Ernst & Young (EY). As a fall out of the scam, the company has already fired several suspected employees and delisted dozens of sellers.
Paytm’s founder and CEO Vijay Shekhar Sharma told reporters that the company first suspected the foul play after last year’s Diwali season. The company found that some listed sellers were receiving unduly large commissions from the cash back offers and this was evidently been done in collision with in-house employees, he added.
However, Sharma was quick to defend the tried and tested cash back model. He claimed that the cash back model is certainly sustainable but his company has failed to leverage it. It was largely on the back of cash back model that the parent company Paytm managed to become a reckoning player in the digital payment space.
The ongoing scam has been unearthed at a time when Paytm Mall’s market share has been receded to paltry 3%. Not long time ago Paytm Mall was touted as a potential challenger to Flipkart and Amazon but today the company is struggling to arrest its downfall. This adverse situation could have been averted if Alibaba and SoftBank had agreed for fresh fund infusion. However, Paytm’s two largest investors have refused to become a saviour and have evidently turned their backs completely on the Gurugram based company.
With the falling market share, Paytm Mall’s balance sheet doesn’t make for a very pleasant scenario either. The company reported almost 1,800 crore loss on the back of Rs 774 crore for the financial year 2018.
