Paytm customers can get access to instant credit for everyday use-cases ranging from movies to bill payments to flights to physical goods
Digital payment player Paytm has partnered with ICICI Bank, country’s largest private sector bank, to jointly launch ‘Paytm-ICICI Bank Postpaid’, offering interest-free short-term digital loans up to Rs 20,000 for a maximum of 45 days.
Beyond 45 days, the bank will charge a penalty of about Rs 50 and an interest rate of 3 percent per month. This offer can be availed by common customers of Paytm and ICICI Bank and for now, will not be available to Paytm Payments bank or ICICI bank’s wallet Pocket’s customers and other bank or wallet customers as well.
“This new offering will enable millions of Paytm customers to get access to instant credit for the first time for everyday use-cases ranging from movies to bill payments to flights to physical goods,” the bank said in a statement.
Paytm-ICICI Bank Postpaid is a digital credit account with instant activation: with no hassles of documentation or branch visit, while activation is fully online. There is no transaction, joining or hidden administration fees either, it added.
Anup Bagchi, Executive Director, ICICI Bank said, "This can be looked at as a private credit card, there are lot of impulse purchases that take place...In general, when people purchase, it is by way of existing money or credit. From the credit they choose, a large of it may get paid but there would be some portfolio, which may get rolled over (delay in repayment) and that’s where we make money. That’s the game."
Available on all days at any time with a quick checkout with an Paytm Passcode, the credit will be granted using the Big Data-based algorithm by ICICI Bank for real-time credit assessment of customers.
The algorithm uses a big data intelligent combination of financial and digital behaviour of the customer including credit bureau check, purchase patterns, frequency of purchase to ascertain the credit – worthiness of a customer within a few seconds.
Based on the credit-score of the customer, the bank offers up to 45 days interest-free credit limit. It ranges from Rs 3,000 to Rs 10,000, extendable up to Rs 20,000 based on the repayment history.
"We will use this data for other loans, or offer cross-selling products. We believe, most of the customers will be new to credit," Bagchi added.
As a start, Paytm-ICICI Bank Postpaid will offer the credit limit to select customers of the bank using the Paytm app. It will shortly be available to non-ICICI Bank customers using the Paytm app.
Once the credit limit is set up for a customer, a consolidated bill is generated on the first day of the next month, which has to be paid by the 15th day of the same month. Customers can use their Paytm Wallet, debit card or internet banking of any bank for an easy repayment of their dues.
Bagchi said, “We are now witnessing two distinct new trends: One, many customers—who are new-to-credit and therefore, do not have a credit history-- are looking for short-term credit. Two, millions of young Indians are now buying products online. We have combined these two insights to bring out a novel proposition of giving short-term credit to people, completely online and instantly. In this endeavour, we have leveraged upon Big Data to develop a new algorithm that instantly assesses the credit worthiness of customers using a combination of financial and digital parameters to sanction the credit line instantly.”
Vijay Shekhar Sharma, Founder & CEO, Paytm said, “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. We believe our customers are sincere with their payments and Paytm Postpaid will play a major role in helping them pay for their daily expenses on time. This will democratize access to credit including those with less disposable income. We are happy to launch credit in a digital way to the masses in the form of Paytm Postpaid with ICICI Bank as our first partner.”
