In its continued push to get more out of its ecomerce segment, Paytm is giving more incentives to merchants for joining its payment platform. Today, the company announced that it has started offering collateral-free working capital loans for merchants on its platform.
To offer such loans, the company has partnered with financial institutions such as Capital Float. As per the company, it will offer loans to merchants such has kirana stores, auto and taxi drivers and milk cooperatives based on their payments history.
Few other lending institutions, including Aditya Birla Finance and Capital First, have also indicated interest in joining as partners.
The small loans would be in the range of Rs. 10,000 to Rs. 1 lakh. It can increase the amount later based on the eligibility criteria and the working capital needs of merchants.
The move will definitely help Paytm to achieve its objective of tapping the under-banked and unbanked segments of the population. It will bring the small retailers into the fold of organised credit.
Kiran Vasireddy, senior vice-president at Paytm, said,
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.
Paytm’s focus on offline retailers and merchants
PayTm is betting big on a huge number of offline merchants who can use its platform to accept cashless payments. Since last year, it has been rapidly expanding its network to these merchants.
According to the company, aroung four lakh offline merchants already accept payments through Paytm. As per the company, it will cross 1 million merchants by December 2016.
It has also formed strategic alliances with retail chains such as Spencer’s Retail, More, WH Smith, Kendriya Bhandar, Heritage Fresh, V2 Retail, Vivek’s Store, Value Plus, etc. Quick service restaurants including prominent chains like KFC, Pizza Hut, Cafe Coffee Day, Costa Coffee, Barista and Vaango already accept payments by PayTm.
The company, which was formed in 2010, is backed by Alibaba Group, SAIF Partners and Sapphire Venture. Paytm Wallet is currently the leading digital wallet service with more than 120 million users, with over 90 million transactions every month.
However, it has quicky expanded its payment ecosystem including payments for toll plazas, school fees, movie tickets. The company is also launching a payments bank for financial inclusion in rural areas.