Payments bank is a new model of banking introduced by RBI in the year 2015. At that time 11 entities applied for the license to operate a payments bank including Paytm, Airtel etc. The concept of the payments bank is conceptualized by the RBI in September 2014. A team of financial advisors led by Nachiket Mor was appointed by RBI. The committee submitted a final report in which they recommended a new banking type and named it as payments banks.
The list of Banks RBI licensed in-principle to 11 entities-
- Aditya Birla Nuvo
- Airtel M Commerce Services
- Cholamandalam Distribution Services
- India Post Payments Bank
- Fino Paytech
- National Securities Depository LTD
- Reliance Industries
- Vodafone M-Pesa
- Paytm
- Tech Mahindra
- Sun Pharmaceuticals
Out of these banks, Airtel launched its payments bank in the year 2017 followed by Indian post and Paytm. Cholamandalam Distribution Services, Sun Pharmaceuticals, and Tech Mahindra have surrendered their licenses.
How do Payments Banks work?
The payments bank works with an online wallet that is digitally maintained. It is connected to Aadhar and phone number of an individual. The online wallet contains virtual money whose value is similar to Indian Rupees. The transaction of the money can be made with one wallet to another or it can directly submit it into the Bank account. This Payments Banks is just like a bank account but with certain limitation. This limitation includes- no loans from Payments Banks, no Credit Cards. The money transferred steps consist of the receiver’s id and the amount to send and the payment of the money is done. It is very convenient that makes it popular among the new generation. As the technology evolving our way to transfer money is also evolving and Payments Bank is one such example. This innovation in the financial sector helped millions of people during the demonetization of the 500 and 2000 bank notes.
Advantages of Payments Bank
Payments Bank has a huge advantage over any other payment method as in this payment method a customer can easily pay with just one click from his mobile phone. This does not require any complex procedure which makes it convenient for the users to pay.
Disadvantages of Payments Bank
The payments bank is not a traditional bank and it is its advantage as well as its disadvantage. Disadvantage because we cannot opt for credit cards as well as a loan from this bank. We only can pay and receive digital money so it is only used for transferring money from one wallet to another.
List of best Payments Bank
Amazon pay
Everyone is aware of the tech giant Amazon they bring the best service when it comes to delivering your favorite product at your doorstep. As recently Amazon launched their Amazon pay wallet in India offering not only a wallet to transfer money but also providing a lot of cash back offers along with their products. The service record of the Amazon makes it top the list as it can capture market fast by its amazing strategies.
Paytm
Paytm is best when it comes to Payments Bank as this is the only wallet that behaves like a bank literally. It has a banking facility organized digitally and offers a savings account with an interest rate of 4% per annum. It also participates in NEFT system with Paytm IFSC Code.
Airtel money
In early 2017, Airtel launched the very first Payment Bank. Airtel money is another popular payments bank which offers good wallet experience. Airtel money app offers very attractive offers when it comes to recharging on Airtel Sim Card.
Paypal
Paypal is the oldest player in this system of banking. It is very popular in USA, UK etc. but entered India recently. Paypal works similar to any other payments bank. There are millions of users in the world and is so far the most popular way of money transaction online.
India Post Payments Bank
India Post Payments Bank (IPPB) is the most trusted payments bank as it is operated by the Government of India under the Department of Posts, Ministry of Communication. The IPPB utilizes its 155,015 post offices as access points and 300,000 postal service workers to provide house banking services which will make people life easier. IPPB also participates in the NEFT system with IPPB IFSC Code.
National Securities Depository Ltd.
National Securities Depository Ltd. (NSDL) is another government operated payments bank. NSDL is historically known to provide service related to as a Depository to hold securities of investors. NSDL participation in the Payments Bank service is very interesting as it may offer very different service than any other payment bank. It is also participating in the NEFT Fund transfer System with the NSDL IFSC Code.
