Interest rate on deposits
Payment banks offer enhanced services compared to a digital wallet, but are not in the same league as the traditional banks. Before you opt for their services, take a look at the rate of interest being offered by them.
Like traditional banks, payment banks too offer interest on deposits in savings account and it can significantly vary. Currently, Airtel payment bank offers 7.25%, India Post payment bank gives 5.5% and Paytm payment bank offers 4% annual interest.
Convenience and reach
Inquire whether a payment bank offers ATM cards that can be used to withdraw money from other banks. Currently, Airtel does not offer such ATM cards. “However, Airtel has over 10 lakh outlets across India and these will become banking outlets allowing customers to deposit and withdraw money,” says Deepak Kinger, VP, Banking and Financial Services, VirtusaPolaris.
However, if you need a debit card, India Post or Paytm may suit you better. “Frequent travellers should also check whether a payment bank can provide forex cards that can be used as a debit or ATM card outside India,” says Harshil Mathur, Co-founder and CEO of payment gateway firm Razorpay.
Bundled offers and discounts
Most of the payment banks have a non-NBFC heritage and will use payment bank as a customer retention and acquisition mechanism. “For instance, Paytm will offer cashbacks and discounts on its e-commerce portal if you pay for the shopping through the Paytm payment bank account. Airtel may give out a discount on utility bill payments made through an Airtel payment bank account,” says Kinger.
So, you will need to choose the payment bank depending on what kind of bundled offers and services you are most likely to avail of.
Charges on value added services
Just like interest rates, it is essential to be aware of the charges levied on the services offered by payment banks. For instance, Airtel payment bank charges 0.65% if you withdraw cash and 0.5% of the transferred amount if you transfer funds to another other bank.
“Customers need to watch out for fee escalations on value-added features and transaction charges which can be substantial for higher ticket transactions,” says Kinger.
Not a substitute for traditional banks
Payment banks cannot lend or offer credit advance to customers like traditional banks. They can issue cheque books and debit cards but not credit cards. Also, unlike traditional banks, you can keep a limited sum in a payment bank account, currently capped at Rs 1 lakh per account.
“Payment banks are not a replacement for the established traditional banks. The later offers many more services. Both traditional banks and digital banks have their own merits and cannot replace each other,” says Mathur.