As Paytm becomes a bank, what happens to the money in the wallet?
Over the next five days, the money in 160-million Paytm wallets will show up in a corresponding number of Paytm Payment Bank wallets as the wallet firms becomes a payments bank.
As the news emerged, some social media chatter created panic amongst Paytm users who thought they would lose money in their accounts. Paytm has scotched these rumours. So what will happen to the money?
It will simply be transferred to Paytm Payments Bank Ltd on January 15. This means existing wallets will move from One97 Communication Ltd (the company currently behind Paytm) to Paytm Payments Bank Ltd. This change does nothing to the money in the wallets. Nothing changes, notes the company. If a person has a balance of ₹2,000 in her current Paytm wallet, the same will reflect in her new Paytm Payments Bank wallet. Wallets that have been inactive for six months and have zero balance won’t be transferred to the Paytm Payments Bank wallet unless their holders specifically consent to the same while logging into the app, web or by e-mail.
This doesn’t mean people with a Paytm wallet need to open an account with the bank to continue to use the wallet. In a December 6, 2016 notification, Paytm said that according to guidelines issued by the Reserve Bank of India, its wallet would be transferred to the Paytm Payments Bank.
“Your Paytm wallet will work as it is, even after January 15. Log in details, wallet balance and user experience will remain the same. The wallet experience will remain the same for all use cases such as paying at stores, paying for Uber rides, ticketing, fuel, etc,” the company said on its website.
Nor does it mean people with a Paytm wallet will automatically get an account with the new bank. “Once we launch the bank, you will be given an option to open a separate bank account with us,” Paytm said in the notification.
Anyone wishing to open an account will have to go through the mandatory know your customer (KYC) compliance that involves documentation such as Aadhaar and permanent account number (PAN). Only money in the bank account will earn interest, not that in the wallet.
Airtel Payments Bank, a competitor of Paytm Payments Bank, currently offers 7.25% per annum on savings accounts. Paytm has not yet announced interest rates on deposits. Paytm did not respond to repeated calls and messages and all information has been taken from public disclosures made by Paytm.