Have you got an email from Paytm stating that you are among select Paytm customers to get exclusive access to Paytm Postpaid? “Now you can do your mobile and DTH recharges, book movie and travel tickets and shop on Paytm, without using your card or bank details or frequent wallet top-ups. Just spend using Paytm Postpaid and pay back the same amount next month. All this, at zero cost or interest," the email says.
Paytm is offering this credit facility to its customers from ICICI Bank. Mint reached out to Paytm and ICICI Bank for clarifications on the service.
Both companies did not respond to our queries, but based on the terms and conditions and FAQs ( see here) on the Paytm website, here are five things to know before you start using the service.
Though the FAQs on the Paytm website state that this facility is being given to Paytm customers who also have an ICICI Bank account, Paytm users not having an ICICI Bank account are also getting the invite. However, the processes are not clear for these cases.
What is it?
It is like pre-approved and instant credit for common customers of Paytm and ICICI Bank. The loan will be given by ICICI Bank to Paytm customers using this service. The eligibility is decided by ICICI Bank based on your transaction history with Paytm.
While setting up your Paytm Postpaid account, you would be required to link your ICICI Bank savings bank account to Paytm Postpaid. At present, the credit limit being offered to users is between ₹500 and ₹6,000.
Though the promotional email does not say it upfront, the service has late payment charges. Paytm will generate a statement for the user on the first of every month for all transactions done using Paytm Postpaid in the previous month. The amount needs to be repaid in full by the 7th of the billing month, meaning you can get a maximum of 37 days of credit without any interest. After the due date, late payment charges will be applicable, in the range of ₹5-600 per month, depending on the outstanding.
For instance, if you have an outstanding of ₹1,000 and you don’t repay by the 7th of the month, you will have to pay a late payment charge of ₹100 per month, which would be 10% of the due amount. Similarly, for amounts above ₹5,000, a of ₹600 will be applicable. Also, if you fail to repay the outstanding dues on time, your Paytm Postpaid account will be blocked till the entire due is repaid.
The default repayment option is auto-debit from your ICICI Bank account. However, in case of payment before the due date, other modes like net-banking or payment using Paytm wallet can also be used to repay the dues.
At present, there is no facility to partially repay the outstanding dues or to repay the dues through equated monthly instalments.
Where can you use
The amount sanctioned under Paytm Postpaid can only be used for purchases made on Paytm Mall, which could include paying bills or buying tickets or merchandise. It is not clear if the amount can be used to make payments using Paytm on other platforms such as Uber. Also, unlike the amount in a Paytm wallet, the amount in the Paytm Postpaid account can’t be used to transfer funds to a bank account or to a friend using Paytm.
When you sign up to use this service and accept the terms and conditions, you will be agreeing to a loan agreement with ICICI Bank. Hence, this will be an active line of credit which will be reported to credit bureaus; failure to repay the dues on time will impact your credit score negatively.
This is not a new or a unique offering. In 2017 too, Paytm and ICICI Bank had announced a similar tie-up for instant credit in the range of ₹3,000-10,000, extendable to ₹20,000. Ola Money also announced a pay later facility for its users in October 2018.
While these services can be used to create credit history and profile, it is important to refrain from impulse purchases. Your spending should be in line with your budget.