For the product, Paytm has tied up with MMTC-PAMP, thereby allowing consumers to buy and sell besides storing gold in the latter’s vault free of charge.
Alibaba backed mobile wallet firm Paytm, which entered wealth management with the launch of Digital Gold in April this year, claims to have sold over 100 kg of gold worth Rs 30 crore. For the product, Paytm has tied up with MMTC-PAMP, thereby allowing consumers to buy and sell besides storing gold in the latter’s vault free of charge. The company earns a fixed fee on each transaction based on the volume of the gold bought or sold on its platform. “Consumers can buy gold on the platform for as low Rs 1 and as high as R8 lakh. While there is a transaction limit of Rs 1 lakh on the wallet, post completion of know-your-customer (KYC), in this case there is no cap as Paytm acts as a facilitator of the transaction,” said Krishna Hegde, senior vice president- business, Paytm.
On Paytm an user who has purchased gold is allowed to sell the metal any time, at market-linked prices, post which the money is directly transferred into the user’s bank account. Compared to this the government, on Friday fixed Rs 3,119 per gram as the issue price for the fourth tranche of its Sovereign Gold Bonds (SGB) scheme. SGB gives an interest of 2.75% per annum, payable every six months on initial investment. In the fourth tranche the government has made a few changes by reducing the minimum subscription denomination to 1 gm from the earlier 5 gm while the maximum remains at 500 gm per person. Application for bonds will be accepted between July10-14, while bonds will be issued on July 28. It should be noted that first three tranches had attracted an investment of Rs 1,318 crore, equivalent to 4.9 tonnes of gold at the then prevailing prices.
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Hegde explained that compared to a government’s gold bond scheme, there is no lock in period of eight years, allowing users to buy and sell gold any time. “Also there is no issue price. In case of gold bond schemes, one has to spend if not a minimum of Rs 3,000, while on Paytm one can buy for as low as R1, thus allowing anyone to invest in gold,” he added.
Furthermore, Paytm is tying with local gold jewelers allowing consumers to redeem the digital gold as against gold jewelery. “A customer who might want to buy a gold jewelery which may be 3 or 4 gm in weight, if has had bought the same volume of gold on the app, can sell that gold to the jeweller through app. Post which she will only pay the making charges,” said Hegde.
MMTC-PAMP on its part will deliver the gold to shop. As for Paytm, it claims to be working on the nature of the commercial deal with jewellers, which will be commission based.