New Delhi: One97 Communications Pvt. Ltd, the company behind payments app Paytm, on Thursday introduced its first wealth management product targeted at lower-middle and middle class Indians. The product, named Digital Gold, will allow users to buy, store and sell gold through Paytm.
“This is our gateway product towards wealth management. For Indians gold is the most preferred way for managing their wealth,” said Krishna Hegde, senior vice president- business, in an interview. While margins could be very low in bullion investments, the company is largely eyeing increased engagement from users.
Paytm first introduced Digital Gold in October 2016 as a pilot project. “We saw a lot of people buy and store gold digitally and that gave us the confidence to launch the product. We sold about 10kg of gold and 60% people kept it digitally,” he added.
One97 partnered with MMTC-PAMP India Pvt. Ltd, a joint venture between Swiss refiner of precious metals PAMP SA and government-owned metals trading company MMTC Ltd, to develop the product. Under the arrangement, the gold sold on Paytm is sourced from and stored in vaults maintained by MMTC-PAMP.
Paymt has added the feature to its mobile app and website. Users will be able to see the prevailing gold price on the portal and purchase the metal in small quantities both in terms of the amount paid or the weight of gold.
One97 chief executive officer Vijay Shekhar Sharma said users can purchase gold equivalent to as low as Re1. The precious metal purchased though Paytm is then stored by MMTC-PAMP. There is no extra charge for storage.
Through the new product users can get their gold delivered at their doorstep, which is possible only when the quantity of gold is at least 1 gm. They can also choose the physical configuration of gold through a catalogue of gold coins on Paytm.
“With this product, our customers can buy and sell international quality gold at market-linked prices instantly. The goal is to offer complete flexibility in deciding the amount they want to invest, and enable consumers to develop habit of saving regularly in digital gold for long-term wealth creation,” Sharma said, adding that only 24 carat, 99.9% pure quality of gold is sold on Paytm.
For compliance, Paytm is adhering to the standards set by the Securities and Exchange Board of India, which requires that for a transaction above Rs20,000 the users has to furnish relevant know-your-customer documents; buyers of gold above Rs50,000 need to furnish details of PAN (permanent account number). There is no cap on the maximum quantity of gold purchased through Paytm.
When gold is bought, the credit is displayed as gold balance in the Paytm account. This balance is converted into physical gold at the then prevailing price and delivered to the user. Users can also convert their gold balance to cash without having to convert it into physical gold.