Almost eight years after it was first launched as a payment platform, Paytm on Tuesday launched its payment bank digitally on its mobile app, starting in beta mode on iOS. Though it was available to limited users.
“Paytm Payments Bank is building India’s first world-class digital bank and aims to build a new business model in the banking industry that is focused on bringing financial services to underserved and unserved customers,” said the company spokesperson.
In May, Paytm Payments Bank was launched with a branch in Noida. It plans to expand to 31 branches and 3,000 customer service points in the first year.
The bank will offer an interest of 4 per cent per annum for savings accounts, which is lower than what Airtel and India Post are offering. Airtel offers the highest interest rates of 7.25 per cent, while India Post is offering interest rates between 4.5-5.5 per cent.
Presently, the company aims to get its users to the bank with its Payments Bank, and transact, P2P, online or offline, using Paytm. It claims to have 211 million users on its platform.
To quote Vijay Shekhar Sharma founder of Paytm during the launch virtual PoS, “With the bank, we’ll have new revenue line items. We are acquiring consumers. We believe the payments bank will make money in the next two years. I don’t think we have an obligation to make money for the next two years. Once people switch, we will reap our dividends in the long term, not short term.”
However, Entrackr query seeking detail on payment bank to Vijay remains unanswered.
The firm already has an offline presence via QR codes. It recently integrated QR code payments on Paytm Mall. Noida-based company claims to have 5 million merchants ranging from small roadside vendors and kirana stores to major retail outlets accept Paytm as their preferred payment method. Its payments bank will also leverage Unified Payment Interface (UPI) to enable users to transact using a virtual payment address issued by it.
We know that Policy change is subject to incremental and keeps changing, maybe two or five years down the line, payment banks will become full fledged banks. Paytm, which is in a habit-forming stage, waits for those days to arrive to cash big in future.