Paytm Payments Bank vs Airtel Payments Bank vs India Post Payments Bank: We review
Paytm Payments Bank that will begin operations today will offer 4% interests on deposits. All deposits will be held in government bonds however the company said it was equipped to offer loans as well unlike other payments banks.
- Paytm Payments bank will offer 4% interest rates on deposits.
- The bank will offer zero charges on online transactions.
- Initial account openings on ‘invite only’ basis with Rs 250 cashback on opening bank accounts.
After much delay and changes in its top management, Paytm has finally launched its much awaited payments bank in New Delhi on May 23, 2017.
Paytm had announced plans to launch payments bank model in a blog post in December last year and said that customers’ Paytm wallets will be converted into payments bank account.
The company, owned by One97 Communications, receied $1.4 billion from SoftBank Group on Monday to further its business in this segment.
— Vijay Shekhar (@vijayshekhar) May 22, 2017
What is a payments bank?
Payments banks were designed to help low income households, migrant workers and small businesses.
As per RBI guidelines of payments banks in 2015
-- They can enable money transfers and remittances through a mobile phone.
-- They can offer services of automatic payments of bills and e-wallet facilities
-- They can issue debit cards and ATM cards and
-- They can transfer money directly to bank accounts at nearly no cost.
How is Paytm Payments bank different?
In its initial phase, Paytm said it would be offering the banks’ facilities only on invite basis.
“Initially, we are making the Paytm Payments Bank available on an invite-only basis. In the first phase, we will roll out the beta version of the banking app for our employees and associates. You can request an invite by logging onto www.paytmpaymentsbank.com or through the Paytm app,” the company said.
The Paytm wallets will now move to Paytm Payments bank in the same capacity i.e. KYC wallet as KYC wallet and minimum KYC wallet as minimum KYC wallet.
In addition to this, Paytm announced an additional scheme for account openers.
“Every customer to open a Payments Bank account will get a cashback of Rs 250 as soon as they bring deposits of a total of Rs 25,000 in their bank account,” Paytm said.
Paytm said it had a 100 million active users on its portal currently which will be automatically transferred to the banks’ new facilities.
However, if customers have not used their wallets in the last six months with zero balance, they will be required to login again to move to the Paytm Payments Bank.
Its first branch would be opened in Noida and another 31 branches with 3,000 customer service points is the target for the company.
Paytm said it would invest Rs 10,000 crore over the next three years for 50 crore Indians to join the mainstream economy.
Paytm Payments bank will also allow deposits of up to Rs 1 lakh along with offering savings and current accounts with a debit card.
Stacking up against the competition
Interest on deposits is at Paytm Payments Bank is much lesser than other payments bank, at 4%.
Airtel Payments bank is offering its customers 7.5% interest, India Post said it would provide 5.5% interest while Mobikwik said that it would offer up to 6% interest on deposits.
All the money in Paytm accounts will be invested in government bonds, the company said.
“Deposits will only be invested in government bonds that are used for the development of our nation,” Paytm said.
Paytm Payments bank is equipped to offer loans and other financial products which a regular payments bank cannot do.
“It will soon enable you to access a range of financial services such as Insurance, Loans, Mutual Funds offered by our partner banks with the seamless Paytm experience,” Paytm said.
In an interview with Bloomberg, Sharma said that Paytm was not going to use the customers’ deposits to lend instead it was going to ask NBFC and others to lend on behalf of them.
While IMPS, UPI, RuPay transactions and NEFT payments would be free of charge and unlimited the bank will charge Rs 100 plus delivery charges for annual subscription for physical Rupay Debit cards, lost card replacement and cheque books.
The bank will allow five free monthly cash withdrawals from its ATMs in non-metro locations and charges of Rs 20 per transaction thereafter.
In metro cities only three free monthly transactions will be allowed.
Paytm has also started its digital vault facility for customers to buy and sell digital gold starting at Re 1 and maintain ‘Gold Balance’ online and even sell gold online.
Customers can also choose to opt out of the payments bank facilities by emailing the company at firstname.lastname@example.org or login to paytm.com/care to notify choice of opting out and redeeming your balance by one time transfer to your own bank account.
“Please indicate the Account Holder Name, Account Number and the IFSC Code of the bank where you wish to redeem the balance within 15 days of notifying your choice,” Paytm said.