Paytm, one of the leading online payments service provider in India, has now entered the online lending domain. The Noida-based company has partnered with ICICI Bank and has launched a product named “Paytm – ICICI Bank Postpaid” which offers interest-free short-term credit.
With this partnership, Paytm aims to enable access to instant credit for its customers for everyday commerce use-cases, ranging from movies to bill payments, flights to physical goods.
The company says that the Paytm-ICICI Bank Postpaid is a digital credit account with instant activation online. It further adds that there would be no transaction, joining or hidden administration fees.
Commenting on this, Anup Bagchi, Executive Director, ICICI Bank said,
We are now witnessing two distinct new trends: One, many customers—who are new-to-credit and, therefore, do not have a credit history—are looking for short-term credit. Two, millions of young Indians are now buying products online. We have combined these two insights to bring out a novel proposition of giving short-term credit to people, completely online and instantly.
Vijay Shekhar Sharma, Founder and CEO, Paytm said,
We believe our customers are sincere with their payments and Paytm Postpaid will play a major role in helping them pay for their daily expenses on time. This will democratise access to credit including those with less disposable income. We are happy to launch credit in a digital way to the masses in the form of Paytm Postpaid with ICICI Bank as our first partner.
There is a credit assessment algorithm at the backend, used for real-time credit assessment for customers. The financial and digital behaviour of the customer, including credit bureau check, purchase patterns, frequency of purchase is taken into account to ascertain the creditworthiness of a customer within seconds.
Initially, the service will be available for select customers of the bank through the Paytm app. It will shortly be available to non-ICICI Bank customers using the Paytm app. Once the credit limit is set up for a customer, a consolidated bill is generated on the first day of the next month, which has to be paid by the 15th day of the same month.
However, Paytm isn’t the first payments startup to come up with such offering. A couple of months ago, MobiKwik announced its partnership with NBFC Bajaj Finance to empower consumers to avail credit facility through the wallet.