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Fintech major Paytm and the country’s largest private bank HDFC Bank Ltd have entered into a strategic partnership for delivering financial solutions to end consumers and merchants across India.

The fusion of HDFC Bank’s network, products, and credit appraisal capabilities and Paytm’s technological platform will accelerate digital transformation in semi urban and rural India, while bringing more people into formal banking channels, the two companies said.

The strategic partnership with the country’s largest private bank comes ahead of the proposed initial public offering (IPO) of Paytm, through which the company plans to raise 16,600 crore before the end of the calendar year.

The strategic partnership will see the two institutions launch innovative products across digital payments, lending and point of sale (POS) solutions.

Paytm and HDFC Bank will build comprehensive solutions across payment gateways, POS machines and credit products, including Paytm Postpaid, which is a Buy Now Pay Later (BNPL) solution, Eazy EMI and Flexi Pay, the companies said.

The first leg of the partnership will include a payment gateway and POS solutions for Indian merchant partners. HDFC Bank will be the payment partner, while Paytm will be the distribution and software partner.

HDFC Bank will drive merchant partnerships across India, to whom Paytm will offer its existing range of Android POS devices. HDFC Bank salespersons will start selling Paytm’s payment solutions in the market.

Paytm and HDFC Bank will also jointly launch a co-branded POS product in the retail segment, which Paytm will have the option to offer to its own customer base.

“Together we aim to provide innovative digital lending and payment solutions for consumers and merchants alike. This partnership will strengthen the financial services ecosystem by bringing together our technology and digital solutions and HDFC Bank’s retail and credit prowess," said Bhavesh Gupta, chief executive officer, Paytm Lending.

Paytm has more than 333 million users and 21 million merchants on its platform.

HDFC Bank, which has more than 50 million credit and debit card customers, is a strong player in the payments ecosystem with leadership in both credit card issuing and acquiring businesses. It has more than two million merchant acceptance points and remains the number one credit card issuer in the country with a spend share of more than 27%.

“Through this partnership, we will also jointly deliver enhanced SmartHub solutions to the market. We believe that this is the start of a great partnership and the cumulative strength of both HDFC Bank and Paytm will help us strengthen our respective leadership positions," said Parag Rao, group head, payments, consumer finance, digital banking, and IT, HDFC Bank.

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