Paytm is reportedly set to foray into foreign exchange and cross-border payments as well under its payments bank entity, having already received the authorised dealership (AD Category II) licence from the Reserve Bank of India. According to the central bank, authorised money changers can offer services of foreign exchange to foreigners travelling in India as well as Indians looking for foreign exchange before embarking on a trip abroad.
An AD Category II entity is authorised by the RBI to offer currency exchange services and prepaid forex cards.
Besides Paytm, other payments banks like Airtel Payments Bank and Jio Payments Bank have also received the licence. Fino Payments Bank was also recently added to this list. These licences will enable payments banks to take a step closer towards becoming full-service financial entities.
Economic Times reported the development quoting sources that the payments bank is all set to start offering foreign exchange services and going forward, could also enter into cross-border remittance services for its customers.
“Having started with payments, Paytm is slowly diversifying into other financial services and foreign exchange conversion will be a starting point and eventually it could also try to venture into cross-border payments both outward and inward,” a top executive of the payments company told ET.
Back in 2016, Paytm had unveiled plans to open up payments for Uber rides outside India for its Indian consumers in collaboration with Chinese payment giant Alipay. But this plan was eventually shelved, likely due to regulatory issues. But the AD Category II licence could reopen such possibilities for Paytm and other payments bank players. This may enable some degree of global portability for a user’s payments bank account.
Fino will offer forex services too
Fino Payments Bank chief executive Rishi Gupta confirmed to ET that they have also received the same AD Category II licence. Gupta said Fino plans to offer foreign exchange services and cross-border remittances within the next three months. Gupta added that the Mumbai-headquartered bank will, for now, offer outward cross-border remittances, but for inward remittance, they have also applied for the Money Transfer Service Scheme licence.
Enabling cross-border remittances and offering foreign exchanges will enable payments banks to grow into full-fledged financial entities. But the interesting thing will be to see how much of this service can be simplified and digitised. If I have a certain amount of cash in my payments bank account can I convert it to dollars immediately right at home from my smartphone? If I’m using my payments bank account to pay for an Uber or some other similar service, can I do it in a friction-free manner like I do here in India? A lot of this will depend on how much regulatory legroom the central bank gives these payments entities in enabling such services.