In the last few years, India’s largest digital payments startup Paytm has diversified its business into multiple segments by integrating several products to its platform in the process. The expansion continues and Paytm has now incorporated two new insurance companies – Paytm Life Insurance Corporation Ltd. and Paytm General Insurance Corporation Ltd.
One97 Communications, Paytm’s parent company now owns six companies in all, which includes Paytm, Paytm Money, Paytm Mall, Paytm Payments Bank and the two new Paytm Insurance companies.
Paytm’s new Insurance companies look to offer differentiated insurance products like health insurance, motor insurance, life insurance and will directly compete with big players like LIC, Future Generali, Bajaj Allianz, Aviva, United, HDFC, NICL and other established insurance companies in the market.
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Paytm Insurance: A Bold Move
While Paytm declined to comment on the RoC filing, as per the sources, these two Paytm Insurance companies will sell insurance products, an area where the digital payments company is planning a major expansion since a long time.
The insurance sector is not new for Paytm. Back in 2015, Paytm had partnered with several insurance companies like ICICI Prudential Life, Religare Health, Reliance Life and Reliance General to provide a platform for customers to pay their insurance premiums online, through Paytm.
The ckmapco has now been granted a composite corporate license by the Insurance Regulatory Development Authority of India (IRDAI) to sell health and insurance products via these new Paytm insurance companies. The license will remain valid for three years until the year 2020.
Paytm Investments & Wealth Management
Early this year Paytm announced Paytm Money Ltd, a new wholly owned subsidiary of Paytm’s parent company One97 Communications which will build investment options and wealth management products for Paytm users.
The Alibaba and SoftBank led payments company is looking to secure a broking licence to get into the trading, selling mutual funds and insurance business. Paytm is planning to build a “three-stack” business model with trading, investments and insurance.
Paytm Money Ltd. will work primarily to manage the investments by selling mutual funds on Paytm and will carry out wealth management business, exclusively for Paytm users. On the other hand, the Paytm Insurance companies will work to build the base in the insurance space for Paytm users.
Paytm’s Future Expansion Plans
Paytm Mall app is all set to join hands with BigBasket and XpressBees to get into the grocery business in a phased manner and to build a logistics solution. Paytm Mall will integrate a BigBasket store in their platform. On the other hand, Paytm is working to build a logistics pillar for Paytm Mall by bolstering the inventory of XpressBees for faster delivery and processing.
Vijay Shekhar Sharma had earlier stated, that Paytm is planning to infuse $2.5 Billion in its e-commerce arm, Paytm Mall to give a tough fight to the big players like Flipkart and Amazon. Backed by big global conglomerates, Paytm has received repeated investments from its investors, which helped the digital payments company in a smoother expansion.
Paytm has launched their insurance companies at the right time when the proposed ModiCare Program and government’s other health policies are raising awareness among people previously not targeted by the big players.
Paytm Score: Paytm’s Own Credit Rating
Paytm will soon launch a credit scoring product called Paytm Score, which will give all Paytm users a credit score based on the transactions made on Paytm and other linked subsidiaries. The Paytm Score takes financial transactions into account, even for users without a formal credit history.
The Paytm Score will take in the customer transactions across the Paytm’s multiple offerings like wallet, e-commerce, bookings platforms and others. Paytm will then share the Paytm score, which will be based on all the Paytm transactions, with its lending partners.
The digital payments firm will soon enter the credit segment after it partially bought online lending startup CreditMate. Paytm also launched a virtual credit card and Paytm Postpaid with ICICI Bank, which is limited to ICICI Bank customers only.
Paytm has already approached some digital lenders and a few non-banking financial companies for its upcoming Paytm Credit and Paytm Score features. Paytm is taking a huge leap towards becoming the next big credit marketplace, thanks to its massive user base and digital payments integration.
Financial services and products will be a primary source of revenue for Paytm Payments Bank. Since the entity cannot lend directly, Paytm has already set up a separate company called Paytm Financial Services to sell its financial products.