Coming Soon to India: PayTM Payments Bank

January 6, 2017         By: Steven Anderson

In a move that might raise eyebrows in the more suspicious out there, recent word out of India notes that PayTM—the mobile payments leader in the Indian market and current lawsuit target from PayPal—has received permission from the Reserve Bank of India to start its own banking operation to be dubbed PayTM Payments Bank.

The company’s goals are both ambitious and noble, and this may be good news for the beleaguered citizens of India, who could use some good news following the recent cash debacle in the country.

PayTM Payments Bank, the reports not, will be something that Indians can be proud of, with three key principles in mind: no entitlement, no fear and no greed. These sound great, but the exact execution is perhaps sketchy.

This also comes fairly close after recent events made PayTM especially popular as a way to channel about-to-be-banned larger denomination notes—500 and 1,000 rupee notes—into platforms that would ensure said cash wouldn’t just end up worthless.

With plans to have five million merchants accepting PayTM by the end of the year, PayTM certainly has ambition enough for most any mobile payment service. Though given the timing of this announcement, this might not have been the best time to roll out such plans.

One, a good chunk of the capital likely going into this new bank came from Indians desperate to preserve wealth. That’s not exactly endearing; Indians going by PayTM Payments Bank branches might well think, oh yeah, this was the only place I could go to keep all my cash from being worthless.

I wonder if they’ll give it all back now? Two, for the more suspicious mind, it’s likely interesting that PayTM’s banking ambitions were so quickly approved, and so close to this financial disaster. Three, mobile payments firms and banks do tend to go hand in hand, but most new banks suffer from being new; they don’t have the reputation built up that other companies do.

This may not be a great move for PayTM, especially undertaken at this time. Still, it’s easy to see a path where none of that matters and customers come right in to deal with PayTM. Only time will tell if this works or not, as both outcomes are quite plausible.