India’s leading mobile wallet platform Paytm is now offering unsecured (without any collateral) and low-interest working capital loans for O2O merchants registered on its platform.
One97 Communications Ltd., the parent company of Paytm has received interest from financial institutions like Capital Float, Aditya Birla Finance for going ahead with this arrangement.
According to this arrangement, Paytm will share the credit profile and transaction history of the merchants registered on its platform with these third party financial institutions for checking their eligibility and the risk assessment. The credit profile is built upon multiple factors including value and volume of the transactions.
In simple words, these financial institutions would be in-charge of sanction of loans.
Paytm will provide loans to those small merchants including Kirana stores, chemists, Milk Cooperatives (already accepted at Mother Dairy booths in Delhi-NCR), auto & taxi drivers, who have a history of accepting payments through Paytm. Paytm will offers working capital loans to these merchants at a much lower interest rates than their current alternatives source of funds like Chit Funds.
These working capital (WC) loans would be in the range of Rs. 10,000 to Rs. 1,00,000 depending upon the merchant profile. This limit can be increased later based on the merchant eligibility criteria and his WC needs.
“Financial inclusion is our main agenda. 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 at zero cost, courtesy which they will get access to low-interest loans,” said Kiran Vasireddy, SVP Paytm.
It is worth noting that not all merchants registered on Paytm will be eligible for getting the working capital loans. Only those having a good transaction history on the Paytm platform would be getting the WC loan.
What Should Merchants With Few Paytm Transactions Do To Get A Loan?
If you are a Paytm merchant who has had very few transactions up till now, but want to get a WC loan, then you better start pushing more and more transactions via Paytm platform. This will increase your chances of getting an unsecured loan from Paytm.
4 lakh offline merchants currently accept payments via Paytm. This number is expected to grow to 10 lakh by year-end, and 40 lakh by the end of 2017.
Paytm has also entered into strategic alliances with many retail chains like Spencer’s Retail, More, WH Smith, Kendriya Bhandar, Heritaga Fresh, V2 Retail, Vivek’s Store, Value Plus, etc. where the shoppers can pay via their Paytm wallet.
Paytm wallet is also accepted at quick service restaurants like KFC, Pizza Hut, Café Coffee Day, Costa Coffee, Barista, and Vaango.
This move from Paytm will not only encourage many merchants to start accepting payments digitally, but would also push the shoppers to go digital and dive into the world of mobile wallets.
Recently, Paytm has also introduced same-day delivery in 20 cities for improving customer experience.