Paytm Starts Operations As A Payments Bank
India’s largest digital wallet company Paytm on Tuesday became the country’s third payments bank to launch operations.
Paytm will offer the lowest deposit rate of 4 percent among peers. Airtel Payments Bank offers 7.3 percent, while India Post pays up to 5.5 percent on deposits.
Vijay Shekhar Sharma, the company’s founder and chief executive officer, plans to make up for the lower interest rate by offering more services. The payments bank wants to build a wealth management business by collaborating with a domestic mutual fund house to offer a money market fund, Sharma said in an interview to Bloomberg.
The company has already sought approval from regulators to launch the product, Sharma said.
We believe it will be one of the best wealth management products for consumers because it will be so easy to get money in and out and still get upwards of 6.5 to 7 percent yields.Vijay Shekhar Sharma, Founder And CEO, Paytm
Paytm can now accept deposits of up to Rs 1 lakh per customer in a savings or current account, and offer other banking services like debit cards and online banking.
The payments bank will offer an instant cashback of Rs 250 to the first million customers opening an account and depositing Rs 25,000 in a savings or a current account.
“Our merchant partners will also have access to current bank accounts. The payments bank will come with zero charges on online transactions and no minimum balance requirement,” the company said in a statement.
Paytm’s first payments bank branch opened in Noida and the company plans to add 31 new branches and 3,000 customer service points in its first year of operations.
Three ATM transactions a month in metros and five in non-metros will be free, after which customers will be charged Rs 20 per withdrawal.
Initial accounts will be by-invitation only and the bank will roll out its beta application for employees and associates soon. Customers can also request an invite by putting in a request on the bank’s app or website.
In the past 48 hours, Paytm sent out messages to its users, asking them to open a payments bank account. However, it gave an option to those who do not wish to open an account to continue using the wallet as it is.
The company plans to open 500 million accounts by 2020.