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Are e-wallets good for gold?

LiveMint logoLiveMint 30-05-2017 Vivina Vishwanathan

If you have a Paytm e-wallet, you can buy and sell gold in digital and physical forms. Though there is a monthly transaction limit of Rs20,000 and a daily transaction limit of Rs5,000 for using the e-wallet, you can buy gold of any amount using other payment modes on the same platform. You can use payment modes such as net banking, credit card or debit card on the same platform and don’t have to load the wallet to buy gold. To enable this service, Paytm has partnered with MMTC-PAMP India Pvt. Ltd—a joint venture between MMTC Ltd and PAMP Switzerland.

The minimum unit you can buy is 0.1gram, which currently costs around Rs2,880, according to MCX data. To make the purchase, among other details, you also need to enter your PIN code. “The idea is to ensure that customers buy gold only if we can deliver the accumulated gold at their location, should the customer choose to convert the digital gold into physical form. However, over time, when we roll out more features to use the accumulated gold, this restriction would be lifted,” said Krishna Hegde, senior vice-president, Paytm. You can make payment through the e-wallet balance, debit or credit cards, Net banking and ATM card. If the value of the cumulative transaction crosses Rs50,000, you will need to go through a full KYC process. If a single transaction value crosses Rs2 lakh, you will need to submit your PAN details. Once you buy, the value of gold with units will be displayed in your e-wallet under the ‘locker balance’ category. The gold will be held in MMTC-PAMP’s vault, the custodian of the gold, right from the point you buy it. Paytm is only a platform for purchase.You will not earn any interest on your investment. If you leave the account inactive for 5 years, the gold held in your account will be liquidated. “If account is inactive for 5 years, MMTC-PAMP reserves the right to liquidate the holding of a customer. However, any such amount would be kept securely in a dedicated account for the customer,” said Hegde. You can claim the amount by reaching out to MMTC-PAMP and providing relevant identity proofs and account details.

There are no charges while buying. However, if you have to sell gold in digital form or redeem gold in physical form, you have to pay a fee. If you redeem gold in physical form—bars or coins—you will have to pay making and delivery charges. According to Paytm’s website, charges for 1 gram of physical gold is Rs351, for 2 gram it is Rs377 and Rs629 for 10gram. Delivery of physical gold happens within 14 working days. You can also sell the gold. To sell in digital form, you need to provide your bank account number and IFSC code, and pay a convenience fee. “The Rs10 convenience fee is to provide for cost of transferring money to the bank,” said Hegde. Once you enter the details, the money is transferred to your bank account instantly. However, you can’t get the money in your wallet. The convenience charge will be deducted from your wallet. When you sell, remember there will be a price difference because sell is a buyback offer by MMTC PAMP. For instance, on 16 May, the buy price was Rs2,922 per gram while sell price was Rs2,789. “The buy and sell prices of gold vary as per the real-time global market-linked price. There’s a spread between the two prices due to costing and taxation elements,” said Hegde.

If you are considering gold for investment, evaluate your financial portfolio and then invest. There are multiple ways to invest in gold such as gold exchange traded funds (ETFs), sovereign gold bonds, physical gold and e-gold. Gold ETFs can cost an average of 0.9-1% a year. In case of sovereign gold bonds, you earn an interest along with capital appreciation, if any. While buying physical gold, you will have to shell out money in the form of making charges and also evaluate the purity. Hence, for investment purposes, you should consider sovereign gold bonds. But if you still want to opt for physical gold and find it convenient buying through an e-wallet, evaluate the cost of physical gold in the market.

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