Paytm’s wallet takes a backseat to Sharma’s banking dreams

  • Sunny Sen
  • Updated: May 31, 2016 06:42 IST

NEW DELHI: Paytm has always been known as a mobile wallet company. But it may not be for much longer: the company, which has got a payments bank licence from the Reserve Bank of India, plans to convert most of its 125 million mobile wallets into savings and current accounts.

“Financial services take the front seat and payment becomes another option that we will offer to our users,” said Vijay Shekhar Sharma, co-founder of One97, the company that owns Paytm. Wallets will now be just a mode of payment.

He says he is building the country’s largest payments and financial services company. Sharma is targeting 200 million bank accounts by the end of 2016-17, and half a billion by 2020.

With the bank account a holder can store money, invest in money market funds (that’s what Sharma will start with), and even take loans (at lower than prevailing standard rates). Sharma said he is talking to all leading non-banking finance companies (NBFCs) and mutual funds.

So does Sharma still need a wallet? “Wallet is a feature and not a necessity… We need it for instant money transfer,” he said.

Payments will always happen through the wallet, which will be linked with the bank account.

It will still be different from banks, though. It will give loans of as low as Rs 1,000, especially for buying goods at Paytm’s marketplace. It will also offer insurance for as low as Rs10-20 premiums. For instance, movie tickets are available on Paytm, and if a buyer has insured the tickets, she will get a full refund in case she misses the show.

Sharma believes that financial services will overtake Paytm’s marketplace and third-party payments. Two years back, recharge was all that Paytm offered: now it accounts for just 25% of the business. In the next few years banking will become bigger than the rest – 50% of Paytm’s revenue.

Once the banking gets going, marketplace will become a separate app, he said. At present, the Paytm app features as a “mall” icon at the bottom. “Soon, we will have a separate app called Paytm Mall,” Sharma said.

The balance in the account will allow users to shop, and to earn interest. The interest will be earned on a daily basis, and there will be no lock-in period, unlike in a traditional bank.

“It is not a traditional bank, it shouldn’t be looked at like one,” Sharma said. But, there are a few things in common. Paytm will have debit cards and cheque books.

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