What is a Payment Bank | Best Payments Bank in India
Payments banks are set up for operating on minimum credit risk and smaller scale. The main aim of setting up payment banks is to offer financial and banking services to untapped or unbanked areas and people.
Payment banks are basically formed to serve low-income families, laborers, or small business units so that these people or businesses can get affordable financial products and services that meet their needs.
Payment banks are a new model of banks in the banking system; these banks are not allowed to issue credit. So they are limited by credit risks
Payment banks can open both savings and current accounts. It can issue debit or ATM cards or can provide mobile or online banking services
The first payment bank to get a license was Bharti Airtel. The first payment bank in India was Airtel payment bank by Bharti Airtel
Right now, there are around six running payments bank in India
Top 6 digital payments banks in India in 2023
1. Paytm payment bank
Paytm a popular mobile payment solution also has a payment bank. It offers a savings account where you can open a savings account with no opening fees or a minimum balance requirement.
However, there is a deposit limit that all payment banks have. You can keep up to a 2 lakh deposit in a Paytm payment bank saving account.
When you open an account, you can also use a virtual debit card or order a physical debit card through the Paytm app.
Interest rates on savings are 2.5 per annum, which is paid monthly. You can check all your account transactions or balance in real-time using the Paytm passbook.
Paytm payment banks debit card is backed by Visa & is internationally accepted.
You can also enjoy cashback and discounts using this visa card. You can withdraw cash from more than 200000 ATMs across the world.
Opening a Paytm saving account is easy, and it is an entirely digital process
2. Jio payment bank
Jio is another popular payment bank; it started operations in 2018. Reliance industries own the Jio payment bank.
Jio bank has partnered with the state bank of India to open a Jio payment bank.
Anyone above 18 years can open an account in the Jio payment bank. Jio payment bank account comes with smart banking features.
This account is a zero balance account, and there is no charge or fees for opening an account in the Jio payment bank. However, Jio payment bank does not issue debit cards.
You get the Jio UPI address which you can use for UPI transactions
3. India post payment bank
Indian post payment bank is from India post. You can open an IPPB saving account through the India post-payment bank app.
The whole account opening process is online and paperless. Indian post works under the government of India.
You can open a regular saving account that offers various services like easy bill payments, remittance services, instant money transfer using IMPS, virtual debit card, SMS banking, QR card, phone banking, free quarterly email statement, and SMS alert
Anyone above ten years is eligible to open an account with India post-payment bank.
IPPB saving account is a zero balance account.
Like any other payment bank, you can not keep more than 2 lakh in your savings account.
What is unique about IPPS saving accounts is they provide doorstep banking service with nominal fees of ₹20.
You also get a virtual debit card with an IPPS saving account. You can generate this virtual debit card using IPPB mobile application.
You can get your RuPay virtual debit card through IPPB mobile application after opening the account.
4. NSDL payment bank
NSDL is another payment bank where you can open a zero-balance account using their app.
You can download NSDL jiffy digital banking app from the google play store. NSDL payments bank is a subsidiary of NSDL.
NSDL jiffy app has many features; you can pay utility bills, recharge fast tags, invest in mutual funds, and buy insurance.
It also offers cashback and exciting offers from time to time. NSDL payment bank is backed by NSDL, one of the world’s largest depositories.
There are only two depositories in India; one is CDSL other is NSDL.
Account opening is user-friendly and is an online process; it makes everyday banking simple and smart.
You also get NSDL Jiffy virtual debit card when your open an account with NSDL.
5. Fino payment bank
Fino payment bank is another payment bank; you can download its app from the google play store to get digital banking services.
Finopay mobile banking application is available on the google play store.
Fino payment bank provides many services like savings & current accounts, debit cards, insurance, and fino pay.
Fino bank is the first payment bank to issue a physical passbook. You must be 18 years old to open an account in a fino payment bank.
Fino bank has various products and provides many services like money transfer, bill payment, mobile recharge, sale pos, current and saving accounts, etc.
Fino bank has more than 400 branch offices all over India. This bank was started in 2017
6. Airtel payment bank
Airtel payment bank is India’s first payment bank, founded in 2017; it got a payment bank license from RBI in 2016.
Bharti Airtel owns Airtel payment bank. Airtel payment bank provides various services you can use like a wallet, transfer money, mobile & DTH recharge, pay bills, get the loan
It has a huge customer base right now. Airtel payment bank has over 60 million customers and 500 thousand banking points.
To open an account, you can go to the airtel payment bank banking point or use the airtel thanks app.
You can download the Airtel thanks app from the google play store. This app provides many features you can also open a bank account in airtel payment bank.
A saving account is a zero balance saving account, and you can earn up to 6% interest on your savings.
This app has so many features you must check this app
7. Vodafone m-Pesa payment bank
This bank was launched in 2013. initially, it got a good response, but later, they announced a shutdown due to challenging market conditions for payment banks in India.
This bank is closed as they surrendered a certificate of authorization or payment banking license to the reserve bank of India
8. Aditya birla payment bank
This bank is also discontinued its payment banking services
Payment Banks in India in 2023
Now there are only six payment banks in India. Reserve bank of India initially gave licenses to 11 payments banks in India, out of which only six are working right now, whereas others shut down their operations
Out of these six working payment banks, some banks are looking to convert themselves from payment banks to small finance banks.
Somehow Indian payment banks are failed to live up to the expectations.
Small margins, limited revenue streams, and the challenging business market making it difficult for payment banks to survive, which is why some have been shut down.
& some others are working on becoming small finance bank
Payment banks features
- Payment banks operate on a small scale
- They differ from traditional banks
- Promoters are required to contribute 40% in paid-up equity of payment banks for the first five years
- The Minimum paid up capital requirement of payment banks is 100,00,00,000
Payment banks area of work
- Payment banks can issue debit cards
- Payment banks can take a deposit of up to two lakhs in saving & current accounts
- Payment banks can receive cross-border remittances and personal payments in the current account
- Payment banks must add the word “payment bank to their name it is mandatory by the rule of the reserve bank of India
- Payment banks can set up branches and ATMs
- Payment banks can undertake bill payments
- Can open savings and current bank accounts for individuals or small business
- Distribute insurance, pension products, and mutual funds
What payment banks can not do
- Payments banks can not issue credit cards
- Payments banks can take the deposit or transfer money but are not allowed to lend money, so they are limited by credit risk or NPA
- They can not accept Deposits from NRI
- Payment banks are not allowed to set up subsidiaries for doing non-banking financial services
Why payment banks are formed in India
Payment banks are formed in India by the reserve bank of India to promote cashless, paperless, and digital banking.
Reserve bank of India allowed non-banking financial organization authority to offer basic banking services & affordable financial products and services that meet low-income group needs
Reserve bank of India grants a payment bank license then only NBFC can open a payment bank
There are still so many people in India that do not use banking services.
RBI allowed NBFC to open payment banks offering low-maintenance saving accounts and other services to tap these unbanked people and areas.
Payments banks are formed keeping in mind lower-income households and migrant workers.
The motive behind the concept of payment banks is to bring these lower-income households and migrant workers into the formal financial system.
Payment bank advantages
- Payment banks offer zero balance account
- Payment banks are helping in the expansion of banking services to unbanked areas such as rural & financial inclusion
- Payment banks are the best alternative to traditional full-fledged banks if anyone is looking for limited services
- Your account number will be the same as your mobile number
- Payments banks offer different discount offers and cashback from time to time
What is the difference between payment banks and other banks
The motive behind setting up payment banks is to give lower-income people and businesses affordable financial products and services that meet their needs.
Payment banks are into payment services and account opening. They are not allowed to give loans or credit cards. Interest rates are similar to traditional banks.
Payment banks can only take deposits up to 2 lakh. So we can say payment banks can provide limited banking services and focuses more on the lower middle class.
There are many traditional banks in India, but there are only six payment banks currently running in India.
Hope you found this article informational; if you have any questions regarding payment banks, then you can ask us in the comment section