Payments Bank is the best thing happen to make the digital India movement a next step ahead. So far there are couple of Payments bank operating in India with the purpose of making the online transactions smooth and flexible. In this article I will try to explain how payments banks are different than normal savings account with any bank.
You can check the list of Payments banks in India where already 4 are operating. They are Paytm Payment Bank, Airtel Payment Bank, India Post Payments Bank and FINO Payment Bank.
Mode of Operation
The major advantage of Payments bank is that there is less operating cost for banks as its completely manage online. Anyone can open a Payments bank savings account from their mobile using their mobile app itself. Although these days similar facility is provided by many banks like ICICI tablet banking, but still its not 100% online.
As the operation cost is less, then such banks can offer high interest rates on savings account. E.g. Airtel payments bank offers the highest interest rate of 7.25% on deposited money. Mostly normal savings bank account have 4% interest rate. There are couple of banks like Yes bank, Kotak bank who offer comparative high interest rates on savings account.
Limitation of services
Besides cash deposit and withdrawal, one can perform various types of other work also like apply for a loan, buy insurance policy, get a credit card etc. In case of Payments bank, as per RBI these facilities are not possible.
As per the RBI guidelines, payments banks cannot lend they can only take deposits or accept payments. Banking experts believe by offering higher interest rates on deposits competition in this sector is expected to rise.
Generally in bank savings account it is mandatory to keep the minimum balance every month, otherwise you have to pay some penalty against not maintaining the minimum balance. But in case of payments bank savings account, they are by default a zero balance account.
Although there are various zero balance accounts available from a normal bank also. Generally all salary accounts are zero balance account or besides them based on meeting criteria one can open a zero balance account in any normal bank in India.
Various charges for transactions
By default for all normal savings bank accounts a similar charges apply for online transactions like fund transfer, IMPS, money withdrawal etc. But in case of payments bank there are different charges with different payments bank.
India Post payments bank charges Rs. 5 for IMPS and NEFT is free of cost. For online transfers within the bank Airtel payments bank doesn’t charge anything otherwise it charges 0.5% of the transferred amount. For every online transaction Paytm payments bank is not charging anything, all fund transfer services like IMPS, NEFT and UPI online transactions are free of cost.
Debit card & ATM card
It is very common with every normal bank savings account, but in case of Payments bank mostly they offer digital debit cards mainly for online transactions & payments. Although Paytm has recently launched physical Rupay debit card with which one can withdraw cash from ATM also.
India Post payments bank offers a free debit card with annual maintenance fee of Rs. 100 from second year. Paytm payments bank is also offering digital debit card for free and an annual subscription charge of Rs.100 for the physical card.