As bank clients make payments to others, this liability circulates, greasing the wheels of commerce, and converting seamlessly back and forth into official money: cash. But a licensed bank simply makes a loan and an equivalent deposit shows up on the liability side of its books in the customer’s favor. To make a loan, lesser lenders must raise funding or find a partner bank to officiate. A banking license is needed is when vows are exchanged. runs one of India’s two largest e-commerce marketplaces.Įverywhere, millennial and Generation Z customers have figured out banking for what it is: a big, fat wedding.įinding and screening borrowers, deciding credit limits, keeping customers engaged with easy online payments - from movie tickets to bus rides - and making them come back for buy-now-pay-later, insurance, and investments in mutual funds, gold and shares, are all things that can be done by a fintech firm - the wedding planner. That makes it nine-times bigger than Amazon Pay, and this at a time that Inc. But it’s accepted by small shopkeepers, even in minor cities and towns. The Paytm app, which was used to transfer $6 billion, was a distant third. Walmart Inc.’s PhonePe and Alphabet Inc.’s Google Pay wallets handled $35 billion and $28 billion in transactions last month, respectively. The digital wallet business has become much more competitive than five years ago, when Paytm ruled. India’s online payment system has modernized at a remarkable speed, thanks partly to crashing data prices and growing smartphone usage. Now, if Paytm had an unrestricted banking license, it could in theory challenge traditional lenders the same way as KakaoBank in Korea. 1 issuer of tags for vehicles to pay tolls electronically, Paytm isn’t doing too badly in originating transactions, either. It had a higher market share last month than the State Bank of India, the country’s largest lender. When you look at where digital money goes in India after it’s transferred online, Paytm’s bank is at the top of the heap in receiving funds. (Until recently, the limit was half that amount.) Even then, Indians clearly see some value in their Paytm Payments Bank accounts. That’s because Paytm only operates a so-called payments bank, which is barred from making loans, issuing credit cards or keeping more than 200,000 rupees in deposits per customer. Paytm’s banking unit doesn’t even have $1 billion yet. It’s KakaoBank’s $20 billion deposits that make the difference. The platform handled 4 trillion rupees ($54 billion) worth of payments to merchants last year, similar to Kakao Pay’s 67 trillion won ($58 billion). In India, Paytm - shorthand for “pay through mobile” - has come some distance from its roots as a tool for people to recharge their pre-paid phone accounts and pay for Uber rides.
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