Digital payments player Paytm will be transferring the payment wallet business to the Paytm Payments Bank Ltd on 23rd May at the launch of bank’s operations. The wallet money will be transferred to the Paytm Payments Bank once the wallet business becomes part of the new company.
Earlier this week Paytm announced the start of bank operations from 23rd May. Renu Satti, the current Executive and Vice President will be CEO of the Paytm payments bank.
Paytm said that all active wallet accounts on the payments app will be transferred to the payments bank. “As per the directions of RBI, the company will be transferring its wallet business to the newly incorporated payments bank entity, Paytm Payments Bank Ltd, under a payment bank licence awarded to a resident Indian, Vijay Shekhar Sharma,” stated in a statement.
The difference between a payment bank and the normal bank is that the payments bank cannot lend or give advance to customers i.e. it can issue cheque books and debit cards but not credit cards. The upper limit for keeping money in Paytm Payments Bank is Rs 1 Lakh. The purpose of these banks is to provide quick and basic banking services to the people at the bottom.
There will be no change in user experience due to payment banking service. The existing acceptance of Paytm for payment of services like taxi, food, fuel etc will remain the same.
Paytm will allow users, who do not wish to transfer their accounts, to opt out through a written request, while for accounts dormant for six months and having zero balances, Paytm will transfer wallets only when the user notifies it to do so. Such communication will have to be made before 23 May.
The announcement the launch of Paytm bank just ahead of its 1.4 B$ fundraise from Softbank on Thursday. The company is planning to invest approximately $1.6B$ over the next three to five years towards getting half a billion Indians on board.