With Paytm entering into banking, wealth management, lending to insurance and probably lending business, the company requires to plug-in several ancillary verticals (by developing itself or acquisition) to keep users hooked.
In such an attempt, Paytm is now planning to develop a credit scoring product, Paytm Score. On the lines of Paisabazaar and BankBazaar, the new credit product will evaluate the creditworthiness of people seeking loans tell the loan eligibility based on customers’ transactions and behaviour.
The payment major has been approaching digital lenders and NBFCs with the product, reports ET. The development also hints that Paytm will enter the credit market by drawing inspiration from its backer Ant Financial.
Besides factoring data provided by lender and banks, the Noida-based company will also evaluate credit score of individuals across its own properties including Paytm Mall, payment platform and other upcoming products including Paytm Money. It will use transaction history to generate creditworthy of individuals.
Expressing its strong interest in the credit segment, the Vijay Shekhar Sharma-led company recently invested in two-wheeler focused online lending platform Creditmate. The company is also launching wealth management product Paytm Money by the next month.
The motive behind acquiring a major stake in CreditMate is to create a robust loan management system by collaborating with lending partners. Launching its first credit offering, Paytm partnered with ICICI Bank to offer short-term credit to bank customers registered with the bank.
Interestingly, even in this case, Paytm is following Alibaba’s model of business.
Alipay has similar credit scoring platform Sesame Credit, a private credit scoring system developed by Ant Financial Services Group, an affiliate of Alibaba. The private credit scoring tracks users’ behaviour on the Alipay app to arrive at a score between 350 and 950, and offers perks and rewards to those with good scores.
In January 2018, Alibaba’s biggest rival in China, Tencent launched its own credit system, Tencent Credit, to all Chinese nationals who use WeChat or QQ.
Amidst the ease of access to loans, there are various drawbacks to such credit scoring system and privacy is the biggest.
Early this year, Ant Financial quoted controversy for misleading users into allowing its Alipay service to share data on their spending habits with its credit-scoring arm Sesame Credit and other third-party services.
Meanwhile, Paytm’s rival Flipkart is reportedly planning to sell financial services, insurance, and mutual funds via its affiliate PhonePe.