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India has four payments banks now. Here is how they differ

Soon these payments banks will also start offering third-party products such as insurance, loans and mutual funds

This week, India’s fourth payments bank—Fino Payments Bank Ltd—started its operations. The first such bank to launch was Airtel Payments Bank Ltd, followed by India Post Payments Bank Ltd and Paytm Payments Bank Ltd. A payments bank is a differentiated bank. Customers can open a savings account in them with deposits of up to Rs1 lakh. However, these banks cannot lend money to their customers. Mint Money takes you through the products and services offered by these banks.

Like Paytm Payments Bank, the newly launched Fino Payments Bank has kept the interest rate on savings accounts at 4%, which is in line with that of large commercial banks such as State Bank of India and ICICI Bank Ltd.

“We are offering 4% interest rate to the consumers because in the products where we park the money, we get only up to 6.5%," said Rishi Gupta, managing director and chief executive officer, Fino Payments Bank.

Meanwhile, Airtel Payments Bank is offering 7.25% interest on deposits in savings accounts and India Post Payments Bank is giving 5.5% on the deposits.

Most payments banks have tied up with commercial banks to offer ATM transactions to customers. For instance, India Post Payments Bank has a tie-up with Punjab National Bank. Similarly, Fino Payments Bank has partnered with ICICI Bank Ltd.

“The charges for ATM transactions will be as per the standard norms," said Gupta. You will get five free transactions in non-metro cities and three free transactions in a metro city, after which you will be charged Rs20 for each cash withdrawal and Rs8 for non-financial transactions. However, India Post Payments Bank doesn’t charge any fee if you withdraw money using an ATM card at India Post Payments Bank ATM or Punjab National Bank ATM. But if you transact in any other ATM, you will be charged a fee as per the standard norms.

Fino Payments Bank, like Paytm Payments Bank, will give Rupay debit cards to customers. Fino Payments Bank offers two types of debit cards—classic and platinum. The issuance fee is between Rs99 and Rs199; and an annual fee second year onwards, which again ranges between Rs99 and Rs199. Paytm Payments Bank has an annual subscription cost of Rs100 plus delivery charges. India Post Payments Bank offers free debit cards, but you will be charged Rs100 if you take add-on cards or a new card in case of theft or loss. Also, it charges an annual maintenance fee of Rs100—applicable second year onwards.

Payments banks have cash withdrawal and deposit charges, if done at a bank branch or merchant outlet. For instance, Fino Payments Bank will charge you Rs5 per Rs1,000 if you deposit or withdraw money at its bank branch. However, every month it offers two free transactions and the charges will be applicable from the third transaction onwards. In case of cash deposits and withdrawals at a merchant outlet, you will have to pay 0.6% of the transaction amount or a minimum of Rs5, whichever is higher. For instance, if you withdraw Rs5,000, you will have to pay Rs30 as fee. Airtel Payments Bank will charge 0.65% of the withdrawal amount if you withdraw cash from a banking point. India Post Payments Bank, for doorstep banking, charges between Rs15 and Rs35, depending on the amount.

Soon these banks will also start offering third party products such as insurance, loans and mutual funds. If you are looking to bank with payments bank, know their limitations and know all the charges.

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