Following Ola-Uber's path, Paytm to provide Rs 5 lakh insurance cover for merchants

Treading on the heels of cab-hailing services such as Ola and Uber, payments major Paytm is also planning to provide an insurance cover for its merchants. This is indeed a good news for over 7 million merchants who are associated with Paytm.

Paytm, which entered into insurance segment in February this year will offer insurance cover of up to Rs 5 lakh to merchants accepting payments on its platform through third-party insurance companies.

The merchants can insure their families and staff, while Paytm will be bearing the premium charges as well. Importantly, if the beneficiaries intend to extend the cover or increase the sum assured they can do it at a nominal charge.

Through this digital insurance cover plan, the Alibaba-backed company aims to reach out to more merchants to provide financial security as well as increase its userbase through the loyalty product.

Paytm has already applied for the licence to offer insurance products from IRDA (Insurance Regulatory and Development Authority).

This is the second major step taken by the company for its merchants in past months. Earlier, this year it had launched ‘Paytm for Business’, a standalone app for merchants to track payments instantly, navigate through the past collections and track settlements made to their preferred bank accounts.

In May 2018, Vijay Shekhar Sharma had also announced to invest over Rs 5,000 crore which will be primarily deployed towards financial services and payments.

Amongst other digital payments firms, only FreeCharge is planning to foray into the insurance space. Since PhonePe and Mobikwik are not contemplating to foray into the financial services anytime soon, the baton is in Paytm's hand to fortify its merchant base through such loyalty building products.

Last year, Cab-hailing majors Ola and Uber had taken the initiative in India to offer insurance cover to their driver partners. Both companies have tied up with third-party insurance service providers to offer up to Rs 5 lakh insurance coverage. Going one step ahead, Ola is also offering in-trip insurance cover to their riders at a mere Re 1 premium/ride.

The development was first reported by ET.