Paytm's financial services major progress to provide collateral-free loans of up to Rs 500,000 at a low-interest rate and a special micro-merchant-customized regular EMI product.  Under the 'Merchant Lending Program' in Paytm for Business app, the company continues to offer collateral-free loans. Its algorithm determines the credit-worthiness of the merchant based on his daily transactions and arrives at a pre-qualified loan offering.

There are no prepayment charges on these loans and loan repayment is primarily collected from the merchant’s daily settlement with Paytm. Paytm processed loans worth Rs 550 crore, benefiting more than one lakh merchant partners, in the last financial year.

Paytm has digitised the whole process from the loan application, approval to disbursement, with no additional documentation needed in collaboration with NBFCs and banks. The company recently launched the Paytm All-in-One Android POS device that allows over 2 lakh MSMEs to accept all payment modes, including Paytm Wallet, all UPI-based applications, Debit & Credit Cards and 'Money'. The 'Paytm for Business' app has become a growth enabler for the Kirana stores as it helps to track settlements made to their bank accounts. It also allows them to immediately monitor payments and work through past collections. Retailers in small cities and towns used this app efficiently and it is available in 10 regional languages.

"We are trying to help Kirana stores and other small business owners with our collateral-free instant loans, who have been left behind by the conventional banking system and do not have easy access to loans and credit. In the future, we will concentrate in particular on EDC merchants and provide higher loan amounts based on their EDC transactions," said Bhavesh Gupta, CEO of Paytm Lending.

Paytm gives instant credit to those who don't have access to loans from the banks due to lack of collateral or credit score.