Paytm to use customer base for payments bank

To have 500 million customers by 2020; in talks with banks, NBFCs for partnership

Paytm, which has been granted the in-principle licence for payments bank, hopes to cash-in on its existing mobile wallet customer base for its payments bank as well.

Narendra Yadav, project manager officer, Paytm, said apart from targeting new customers, the company would also focus on migrating the existing customers, allowing it to start with a substantial customer base on the day it commences operations. “There are two kinds of customers. One for which detailed know-your-customer checks have been done - it will be easier to shift these customer compared to the second kind for whom KYC hasn’t been done. We’ll have to take consent from customers for this. Since these customers already have a relationship with us, it will be easier to transfer these customers to the payments banks.”

However, the mobile wallet customers that Paytm currently has cannot be automatically shifted to the bank. Paytm has chalked out an ambitious plan of having about 500 million customers for its payments banks by 2020.

Yadav said in order to ensure the target is achieved, the company will invest heavily in technology to ensure the cost of transaction remains low so that more people can be brought into the banking fold.

The company is also looking at exploring several tie-ups to enable certain functions such as lending, which payments banks are not allowed to undertake. “We will be entering into a large number of partnerships of different kinds with private players, public institutions etc to create a suitable ecosystem. For this, we need tie-ups with multiple parties and this partnership will be the core part of our operating property. We have already initiate conversations with multiple players,” he added.

PAYTM’S PAYMENT BANK

Ambitions

• Paytm has an ambitious plan of having about 500 million customers for its payments banks by 2020.
• In order to ensure the target is achieved it will invest heavily in technology to ensure the cost of transaction remains low
• Is exploring several tie-ups to enable certain functions such as lending, which payments banks are not allowed to undertake
• Paytm is looking to invest about Rs 1,200 crore in payments banks over the next three years
• The company wants to be the first ones to launch operations and has set out a target of April-May 2016 for launch

Payment Bank

• Payments banks can accept deposits of up to Rs 1 lakh and can offer current and savings account deposits
• They can also issue debit cards and offer internet banking
• They are not allowed to lend or issue credit cards

Payments banks can accept deposits of up to Rs 1 lakh and can offer current and savings account deposits. They can also issue debit cards and offer internet banking. But they are not allowed to lend or issue credit cards.

Paytm is looking to invest about Rs 1,200 crore in payments banks over the next three years. The company wants to be the first ones to launch operations and has set out a target of April-May 2016 for launch. Apart from Paytm, 10 other players have been given the in-principle payments bank licence by the Reserve Bank of India.