Paytm has partnered with ICICI Bank to launch Paytm-ICICI Bank Postpaid that will offer customers instant digital credit ranging from Rs 3,000 to Rs 10,000, and is extendable up to Rs 20,000. For now, the facility is available only to ICICI Bank customers who own a Paytm wallet. But the bank plans to roll out the option to non-ICICI customers as well. Additionally, it is open to tying up with other payment gateways as well as “large format e-commerce” companies for the same.
This is the first time that a large commercial bank is offering loans through a digital payment service. Users can avail up to 45 days interest-free credit on their Paytm wallets, following which a 3 percent charge would be levied until the payment is done. Paytm-ICICI Bank Postpaid can be utilized to pay for movies, flights, buses, utilities, and all other transactions on Paytm. ALSO READ: Paytm Gold now available with free locker facilities
While checking out, customers will see a ‘Pay Later’ option, and on clicking it, their credit score would be calculated instantly. ICICI Bank will arrive at the credit score based on behavioral data from Paytm, the bank’s own customer data, and financial data from the Credit Bureau. The amount of loan issued would depend on the cumulative credit score of the customer.
Paytm has announced that there are no transaction, joining or hidden administration fees involved in this offering. And users wouldn’t require any separate documentation to avail the feature. The loan is available 24×7 on all days of the year. Once the credit limit is set, a consolidated bill will be generated on the first day of the next month. That bill has to be cleared by the 15th of that month. Customers can use their Paytm wallet or debit card or internet banking (of any bank) for repayment of the loan. ALSO READ: Paytm announces ‘Make Your Salary Day a Savings Day’ initiative to promote digital gold
This is a great opportunity for Paytm to push transactions across its verticals from movie and travel bookings to purchases on Paytm Mall and more. It also democratizes credit and puts them in the hands of those with less disposable incomes. “It’s common for us to ask a trusted friend for money for frequent expenses and promise to pay later. These exchanges are based on trust that you will pay back as soon as you have access to money… Paytm Postpaid will play a major role in helping customers pay for their daily expenses on time,” Vijay Shekhar Sharma, Founder & CEO – Paytm, stated.
For ICICI Bank, meanwhile, the partnership means access to Paytm’s growing customer base, as well as a chance to gain new credit customers. Because this isn’t a revenue-sharing arrangement, the bank would pocket earnings from loan defaulters as well. “We take both the upside and the downside,” Anup Bagchi, Executive Director, ICICI Bank, said on a conference call. “Most of the customers would be new to credit. It is a convenience product for them. And it will help them during impulse purchases,” he added.