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How India Post’s Payments Bank stacks up against Airtel’s operations

The Department of Posts has launched India Post Payments Bank operations on a pilot basis in Ranchi and Raipur yesterday. This makes it the second payments bank to commence operations following Airtel. However, in terms of services offered, India Post Payments Bank (IPPB) and Airtel Payments Bank (APB) differ quite a bit.

A refresher on what a payments bank can and cannot do:

Types of bank accounts:
India Post Payments Bank: The IPPB offers three kinds of bank accounts called Safal, Sugam and Saral. The payments bank classifies the Safal account as a regular account while it calls Sugam and Saral  as basic savings deposit accounts. Safal and Sugam accounts have a maximum balance of Rs 1 lakh and the maximum balance on a Saral account is Rs 50,000. The Safal account attracts an annual maintenance fee of Rs 100 from the second year. More details here.

Airtel Payments Bank: On the other hand, Airtel Payments Bank does not make a distinction like IPPB on types of accounts. It will, however, make a customer’s mobile number their bank account number (not only Airtel mobile number, any mobile number – whether it’s Vodafone, Idea, Reliance etc.)

Interest on bank accounts:
India Post Payments Bank: Interest on deposits in IIPB works differently and they are paid out quarterly as opposed to per annum. It also has a three-tiered structure which depends on the quarterly average balance (QAB) in an account.

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– If QAB is less than Rs 25,00 the interest is 4.5% per annum
-If QAB is above Rs 25,000 and below Rs 50,000 the interest is 5% per annum
– If QAB is above Rs 50,000 the interest is 5.5% per annum

Airtel Payments Bank: In contrast, Airtel offers an interest rate of 7.25% per annum on savings account deposits along with personal accidental insurance of Rs 100,000.

Debit cards: 
India Post Payments Bank: The IPPB says it will provide a debit card to every bank account for free. Any other subsequent cards issued will be charged Rs 100. Note that it has not mentioned which card network the debit cards will be on – RuPay, Visa or MasterCard.

Airtel Payments Bank: APB will not be issuing a physical debit card. However, customers will be given a virtual card which will be linked to the savings bank account so that customers can make payments across all online merchants. Airtel has partnered with MasterCard for the same.

Funds transfer:
India Post Payments Bank: Domestic remittance services will be provided through NEFT, IMPS, Aadhaar-Enabled Payment System (AEPS), UPI and *99#  (USSD banking).

– Transactions on the AEPS are limited to Rs 10,000 but the accounts need to be linked to Aadhaar and can happen on micro ATMs only.
– Transactions on the UPI have a limit of Rs 1 lakh and money can be transferred to any bank account.
– USSD transactions are limited to Rs 5,000 per transaction. More details here.

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Airtel Payments Bank: Airtel will be charging customers a maximum of 0.65% for a cash withdrawal transaction.

A brief look at the charges Airtel will levy on customers:

Other services: 
India Post Payments Bank: Will allow doorstep banking where a customer, for a nominal fee, can request and avail banking and related services at their door. Right now doorstep banking will have:
– Cash deposits
– Cash withdrawal
– Balance enquiry
– Aadhaar to Aadhaar funds transfer.

Direct Benefit Transfers (DBT) will also be done on the IPPB and transfer subsidies directly to the people through their bank accounts. Funds from the disbursing agency are automatically credited into the beneficiary accounts through NACH/APBS instead of cash disbursal.

IPPB will also provide current accounts and access to third party financial services like insurance, mutual funds, pension, credit products, and forex at a later stage.

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**

RBI had permitted 11 entities to start a payments bank and the list is down to eight. Tech Mahindra, Cholamandalam Investment and Finance company and Sun Pharma promoter Dilip Shanghvi surrendered their payments bank licence last year. Paytm got its payments bank license from the RBI earlier this month but is yet to commence operations. Meanwhile, Airtel has launched its payments bank operations in Rajasthan, Andhra Pradesh, Telangana and Karnataka.

Correction: An earlier version of the story said that Airtel Payments Bank would set an Airtel number as its bank account number. Airtel clarified that any customer’s mobile number will work.

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