Payment Banks are small institutions that enable easy banking. Your phone service provider or digital wallet can become a BANK!

What Can You Do at Payment Banks:

• Deposit up to Rs.1,00,000 only
• ATM, Debit Card services
• Buy Mutual Funds and Insurance
• Mobile Banking services (transfer money, receive payments etc)
• No loans or Credit Cards

Should your small business get a Payment Bank Account?

Have you been thinking about getting a payment bank account? Here are the pros and cons of opening an account with payment banks:

The Good

• If you have 5-6 employees, you can open salary account instead of paying in cash
• Higher interest rate on savings account – around 7%
• Simpler KYC norms
• Banking services at doorstep
• Risk of fraud low because of capped deposit balance
• Zero balance account
• Cashback and discount offers (acts as wallet+bank)

The Bad

• No credit availability
• Existing banks already offer services like payment banks (ICICI Pockets etc)
• RBI can revoke a payment bank’s license fairly easily than a regular bank
• You cannot make investments via payment bank account.
• Your mobile number is not your account number. Collecting payments would be a hurdle.

Payments Bank Account – Yay? Or Nay? Tell us what you think in the comments. Want an easier way to collect payments online? Try the Instamojo experience today!

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