Wednesday, 24 May 2017

Paytm launches payments bank.

Paytm Payments Bank will become operational starting Tuesday, and will expand to 31 branches and 3,000 customer service points in the first year, the company said.

The bank will also offer a cashback of Rs 250 to customers depositing Rs 25,000 in the payment bank.

Vijay Shekhar Sharma, the Chairman, said, “RBI has given us an opportunity to create a new kind of banking model in the world. We are proud that our customer deposits will be safely invested in government bonds, and be used for nation building. None of our deposits will be converted into risky assets”.

Paytm Payments Bank will get Rs 400 crore in investment in the first two years of operation. One97 Communications founder Vijay Shekhar Sharma personally owns a 51% stake in the payment bank, as per regulatory requirements, with the remaining stake owned by One97 Communications. 

Sharma and One97 have together already invested about Rs 220 crore in the payments bank.

In case you're a Paytm wallet user - and that number has grown a lot since November - and you're wondering how this change will impact you, here is everything you need to know.

1. All Paytm wallet accounts will automatically be migrated to the new Paytm Payments Bank. If you don't want to continue with the bank, you have to opt out by emailing or visiting to opt out and redeem your balance by transferring it to your bank account.

2. Your account will remain a wallet account with PPBL, not a bank account. Accounts that have been inactive for six months, and have zero balance, will not be transferred to PPBL without opting-in. In addition to the wallet account, you will also be able to open a Paytm payments bank savings or current account. Although both will have the same login, you will need to open a bank account separately.

3. The Paytm Payments Bank accounts are being rolled out as a beta, for employees and associates. Other people can also request an invite to become account holders in the bank. These accounts have a limit of Rs. 1 lakh per customer and are different from wallets because they can offer debit cards, and interest.

4. To get a Paytm Payments Bank account, you have to visit Paytm's Bank page, and then click on Request an Invite. This will ask you to sign in to your Paytm account, and once you do that, automatically log your interest in becoming an account holder.

5. If you transfer more than Rs. 25,000 into your Paytm payments bank account, you will get a cash back of Rs. 250 (1 percent), up to four times.

6. There is no minimum balance requirement for the bank account. Also, online transactions (such as IMPS, NEFT, RTGS) will not have any charges.

7. A big difference between a wallet and a payments bank is that the latter can offer interest. Paytm will be paying 4 percent per annum. This is lower than the 7.5 percent interest that Airtel payments bank is offering, and in line with what you get from Axis, ICICI, and HDFC.

8. Also, unlike wallets, payments banks can offer debit (but not credit) cards. According to Paytm's website, physical services such as a chequebook, demand drafts, and debit cards, will be available from the Paytm payments bank, at a nominal fee. Interestingly, Airtel isn't offering a physical debit card, but a virtual one to use online.

9. The Paytm bank will issue a Rupay debit card, which will be free, but it will charge Rs. 100 + delivery as an annual fee; a lost card replacement will also be Rs. 100 + delivery. A 10-leaves chequebook will also cost you Rs. 100 + delivery charges.

10. Paytm isn't bringing out its own ATMs. However, its debit card can be used with no charges five times at any non-metro ATM, or three times at metro ATMs. After that, there will be a Rs. 20 cash withdrawal charge, while other transactions such as balance checks will cost Rs. 5.

The company is aiming to replicate this success in the banking sector and further drive cashless transactions with the Paytm Payments Bank. The current Paytm Wallet will move to the Paytm Payments Bank in the same capacity. Users will continue to be able to use their Paytm Wallet in the same manner as before, the statement said.


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