War against Cash – Paytm's story so far

Paytm is eyeing an October launch for its payments bank. This will allow it to accept demand and savings bank deposits up to Rs 1 lakh per account. However, it’s also been up to a lot more recently.

The mobile payment and commerce platform has enabled micro-loans for its merchants, partnered with colleges and major offline retail networks, and invested in a data analytics firm and Jugnoo.

Business Insider spoke to the company’s Senior VP Kiran Vasireddy for a quick update on recent developments.

How different is your credit score rating system from a bank?
The problem with the traditional banking system is that it needs a credit score which is built from your loan repayment history, bank balances and CIBIL score . If one doesn't have any of these, he or she won’t get a credit card or a loan and hence will never have a credit score . It's all a cycle. Availability of unsecured loans at low interest rates has been a challenge for small merchants till now, forcing them to borrow through high-cost methods like chit funds.

By accepting payments through Paytm consistently, merchants can now get a digital footprint & a credit profile at zero cost. Our platform consumes vast amounts of payment data to build a credit profile of the merchants and runs several mathematical models in parallel that helps us with the underwriting decisions. It is these recommendations that our lending partners use to further underwrite loans to the eligible merchants.

College fees can run into lakhs. Why go there?
People pay their college tuition monthly or quarterly. This typically doesn’t run into lakhs.

However, this isn’t just about the fees. It’s about the complete ecosystem within a campus. In these ‘cash-less campuses’, you can pay for anything, right from the fees to food bills in your canteen to the local grocery stores within campus with our wallet.

In some of these colleges, 70-80% of the fee transfer happens through us.

How much money are you processing?
We’re currently processing over 95 million transactions a month, and $4.5-5 billion a year at previous month’s run-rate.

Update on Alipay-Paytm partnership.
Our internal integration with Alipay will take another quarter. They are our key strategic investors and partners, and we’re leveraging their technologies and expertise.

However, at the end of the day the markets are different, and we do have to come up with products that are relevant to this market.

Would you acquire/invest in any last mile logistics player?
I don’t see that in the pipeline.

We have invested in Jugnoo and a data analytics firm in the logistics space (LogiNext Solutions). We are also planning a logistics cloud where companies can partner.

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