Recently, Paytm has come up with the option whereby users, instead of using their wallets for making payments, can use their credit card on the Paytm platform to complete a transaction. While on one hand, it eliminates the necessity of having wallet balance altogether, on the other hand, credit cards usually offer higher credit limits and are majorly used for transactions exceeding the average transaction size of Paytm. This option was available for online transactions but has now been made extended to offline as well.
“Once a user starts using credit cards, the transaction value increases instantly and it is poised to increase as we have undertaken a slew of measures. However, at this point of time, I can’t say to what extent it will grow”, the company’s vice president, Amit Veer told Business Standard.
He reasoned further that although the daily transaction limit for the merchants has been capped at Rs. 1,00,000 from the previous Rs. 25,000 a day, effectively, a merchant can transact any amount.
Earlier this month, the mobile commerce company had partnered with IndusInd Bank whereby, a fixed deposit account (FD) with a 6.85 per cent interest rate will be automatically created for merchants who have balance in excess of Rs. 1,00,000 in their account.
As per legal regulations, merchants on the payment bank’s platform cannot keep balance in excess of Rs. 1,00,000. Thus, the excess amount is automatically transferred to the FD account.
“Fixed deposits with an attractive interest rate will surely entice new merchants to come on our platform. As the merchant base increases and users start using their credit card, the average transaction value will surely increase”, Veer reasoned.
The SoftBank and Alibaba-backed digital financial services company, which sees around 10 million transactions each day, has targeted to add another four million merchants to its existing base of six million in the coming two fiscal quarters and has earmarked Rs. 5 billion this year to conduct merchant training and increase awareness among the merchant class.
Around 10 million transactions are done on the Paytm platform every day of which 58 per cent accounts from tier 2 cities with metro cities accounting for 31 per cent. The rest comes in from tier 1 cities.
In addition to the existing financial services, it will also be launching new financial services this year. In January last year, the platform received the Reserve Bank of India’s nod to emerge as a payments bank.