Equated or Easy Monthly Instalments have changed the lives of consumers across the world. They have also provided the proverbial shot-in-the-arm for NBFCs, digital lenders, MFIs, and banks in the country.
India’s lending market has doubled in the last five years. According to a report titled How India Lends, retail, microlending, and commercial lending portfolios have increased by 91%, 157%, and 93%, respectively.
However, dealing with recurring payments is difficult. This is true for businesses as well as the end customers. The payment solutions for businesses that regularly deal with recurring payments, have to be different from regular online payment products.
When it comes to making or accepting recurring payments there are a few challenges:
- Untimely reminders
- Payment failures
- Third-party verification of accounts
- Delayed settlements
Solving recurring payment woes for the BFSI sector
Banking and other financial businesses that rely on recurring payments suffer when users fail to make payments or deposits on time. In our discussions with the stakeholders in the industry, we learned that the industry needs a reliable payment solution that can automate this and encourage users to make timely payments.
These are the industries that require timely payment collection tools.
- Insurance: Insurance firms require users to pay premiums either monthly, quarterly, or half-yearly. If insurers fail to pay their premium for a considerable amount of time their policy might lapse.
- Mutual Fund: Systematic Investment Plans (SIPs) are on the rise as it has caught the fancy of the middle-class population. Mutual fund companies require these new investors to be consistent with their SIP plans without fail.
- Lending: One of the major concerns of lending companies is customers who default on their payments. In 2021, NBFCs saw 6-8 percent of borrowers default on their payments, a substantial rise from the average default rate of 2-3 percent.
- Credit card: Paying credit card bills is a pain for users today. This is specifically true for those who have more than one credit card from different banks. Banks need a payment solution that solves this problem without adding any new tech layer.
During the extensive research conducted while creating the product that fixes all the gaps, we found that irrespective of the industry, consumers want to have the ability to set up automatic monthly payments.
For consumers, this takes away the worry of missing essential required payments. And for companies, this ensures they receive payment on time.
Our solution is engineered specifically keeping in mind the needs of investment, insurance, loans, and credit-card players.
Features of Paytm Payment Gateway for BFSIs
- Automate recurring collections
To reduce the default rate for recurring payments, the National Payments Corporation of India created NACH (National Automated Clearing House) mandates. NACH mandates allow companies to automatically collect payment from customers’ bank accounts when the payment is due.
However, the problem is that banks take up to three weeks to create NACH (National Automated Clearing House) mandates. When people are used to making payments in less than a minute, three weeks is a very long time.
Paytm Payment Gateway trims this time to a few hours. This time factor plays a significant role for customers who want to start a unit-linked insurance policy. Insurance firms can also enable UPI Autopay via Paytm Payment Gateway.
Once you have automated payments for your users, there is no looking back. Paytm has the best-in-industry success rates for setting up eNach mandate through Net Banking or UPI Autopay.
- Direct and Split settlements
When it comes to investments, time is valuable. If settlement periods are long retail investors would stand to lose their money.
Paytm Payment Gateway allows mutual fund intermediaries or AMCs to make direct settlements of funds once customers transfer the money. We have partnered with eight banks for direct settlement.
While this is useful for all kinds of investors, this is specifically important for customers who do intraday trading.
AMCs can use Paytm Payment Gateway to give their users a better buying experience. Just like how one would buy different products from an e-commerce platform, retail investors can invest in different types of mutual funds by paying the total amount. Our Split Settlements feature automatically splits the values into customers’ respective orders.
- Security and compliance
Paytm Payment Gateway has one of the most robust and secure platforms for payments. We have a well-equipped team of cybersecurity experts who ensure each transaction made via Paytm Payment Gateway is safe.
We are certified by the Payment Card Industry — Data Security Standards (PCI-DSS) with 128-bit encryption. We use AI to monitor suspicious activity on the platform and block transactions that seem notorious.
As an added security layer, our SDK scans user devices for the presence of dangerous apps and unless these apps are uninstalled, it does not allow any transaction to take place on users’ devices.
As per SEBI’s rules, all users that enable eNACH mandate and UPI Autopay should have their account registered with SEBI. We have partnered with 31 banks to verify accounts that pay via eNach mandate. We also verify bank accounts for UPI Autopay via our partnership with all the banks in the country. This allows us complete third-party verification.
Thus, both our partners and end customers are compliant with the investment norms.
- All payment options enabled
Different industries have different guidelines for how customers can make payments. For example, SEBI doesn’t allow payments through credit cards for investing in mutual funds.
Keeping all the regulations in mind, Paytm Payment Gateway allows investors to make payments using all the payment options that fall in the green zone.
For loan repayments, the monthly payment collections can be set up through net banking or UPI Autopay. For credit card bill payments, since debit cards are allowed, this option is available in the subscription solution. For insurance premium payments, subscriptions can be set up via credit cards and wallets as well. The payments suite also lets customers pay their insurance premiums using Bharat Bill Payment System (BBPS).
If you are in the BFSI space and want to enable your business to collect recurring payments, Paytm Payment Gateway is Godsend. Switch to Paytm Payment Gateway today.