Paytm Money Review and it’s Demat & Trading Account Services: In 2019, Paytm announced its entry into stockbroking through the launch of Paytm Money. The discount broking segment which Paytm enters involves only executing orders on behalf of the clients has become synonymous with online broking.
Despite its widespread acceptance in the brokerage community it still can be debated if entering this segment was wise. This is because less than 3% of the population of the country is currently involved in the stock market. In addition, the segment already includes players like Zerodha, Upstox, ET Money, Groww, Angel Broking, Sharekhan, etc. Today we discuss this move and the features brought to the table by the new product.
Why has Paytm entered stockbroking?
Paytm received approval from the SEBI in 2019 in order to enter the stockbroking segment. Paytm over the years has tried to establish itself as the one-stop platform for anything money-related in the recent past. After gaining traction post demonetization the online payments platform offered banking services, mutual fund, SIP, pension products. They also have acquired Raheja QBE in its plans to enter the insurance segment before expanding into the discount broking.
Paytm’s plans to enter stock broking couldn’t have come to fruition at a better time. In the months of April and May, NDSL and CDSL saw an addition of 2 lac and 12 lac new Demat accounts respectively. The lockdown imposed due to the COVID-19 pandemic has forced the work from home model to be adopted. This has led to an increase in the first time investors flocking to the stock markets with the added disposable income, as they as they are forced to spend less on leisure due to the pandemic.
The markets too favored the entry of first-time traders as after the steady fall from Feb-March the markets rebounded gaining over 45%. This allowed new entrants to gain profits making trading all the more attractive. In addition, the added information availability in the new environment has made it easier for new entrants to learn the trade.
Paytm Money, however, has not set the existing trading community as the only probable consumer base. India is expected to have 44 crore smartphone users whereas there currently exist only 1.2 crore active traders in the market. Paytm predominantly functioning on smartphones will have multi-folds of unexplored markets available for them. Paytm Money which has investors from over 98% of the pin codes in India will have the added advantage due to this existing under penetration in the country.
— Zerodha on Paytm
Zerodha which currently dominates the market with 4 million customers and an 18% share last year made a profit of over Rs.1000 crores. Nithin Kamath, CEO of Zerodha, commented on its new competitor saying,
“The big problem in India to solve is to grow the capital market ecosystem. While it has increased over the last six months, there are 90 lakh Indians who invest in the stock market. There is another one crore more who can enter the market. For that one crore to come, you need platforms with great distribution capability Paytm is one of those who can. If anyone in the country can expand fast, I think Paytm can do that.”
Paytm Money Review – Delivery, Intraday and F&O Charges
Here are the brokerage charges offered by Paytm Money:
- Delivery: ₹0.01 per executed order
- Intraday: Minimum of 0.05% of turnover or ₹10
- Futures: 0.02% of turnover or Rs. 10/- per Executed Order, whichever is lower
- Options: Rs. 10/- per Executed Order
Paytm Money Charges:
- Demat & Trading Account Opening Charges (One Time): Rs 200
- Annual Maintenance Charges (Yearly): Rs 0
— Paytm Money Delivery Charges
| Charge | Delivery Rates |
|---|---|
| Brokerage | Rs. 0.01/- per executed order |
| Exchange Turnover Charges | 0.00325% of turnover for NSE and 0.003% of turnover for BSE |
| GST | 18% on Brokerage and Exchange Turnover Charges |
| Security Transaction Charges (STT) | 0.1% of turnover on buy and sell orders |
| SEBI Turnover Fees | 0.0005% of turnover |
| Stamp Duty | 0.015% of turnover on buy orders |
— Paytm Money Intraday Charges
| Charge | Intraday Rates |
|---|---|
| Brokerage | 0.05% of turnover or Rs. 10/-, whichever is lower |
| Exchange Turnover Charges | 0.00325% of turnover for NSE and 0.003% of turnover for BSE |
| GST | 18% on Brokerage and Exchange Turnover Charges |
| Security Transaction Charges (STT) | 0.025% of turnover on sell orders |
| SEBI Turnover Fees | 0.0005% of turnover |
| Stamp Duty | 0.003% of turnover on buy orders |
(Source: Paytm Money Trading Charges)
Paytm Money Review – Attractive features offered by Paytm Money
- One of the most attractive features comes with the attractive prices offered by Paytm which even trump many market leaders. They offer the lowest charges on intraday trade which is at Rs. 10 per trade.
- The app also provides in-depth financial and historical price data for every listed company which enables investors to research the stock market on their own.
- Using the Smart Search and notification option the users can discover and set alerts for as many as 50 stocks and get notified when the price is reached.
- The app also has the added advantage of offering not only stock and derivative trading options but also offers other mutual funds and National Pension Scheme products.
- The app also includes a built-in calculator that enables users to find out the transaction charges and know the precise breakeven price to sell the stocks on profit.
- Users can automate stock investing by setting buy orders on a weekly or monthly basis.
- Advanced charts and other options like cover order and bracket order have been offered in order to make the experience more rewarding
- The brokerage fees for the segment futures are the same as those for intraday. The options brokerage offers flat Rs 20 per trade regardless of the number of lots.
- Delivery segments allow the transactions you are brokering shares today on another day. No additional charges are made for these, where no purchases and sale is made on the same day.
- Another advantage that Paytm offers will be with respect to data security. Paytm being in the digital walled industry comes with absolute data privacy to keep investor data safe with bank-level security.
Opening a Demat Account with Paytm Money?
Opening a Demat or Trading Account using Paytm Money can be done within 24 hrs by the following steps:
- Download the Paytm Money App
- Click on complete your KYC by filling in the required information.
- Upload the documents i.e. PAN, Aadhaar and bank details (Cancelled cheque/Account statement)
- Submit and You can start trading/investing once your account is active
Pricing comparison between Paytm and Zerodha
| Activity | Paytm | Zerodha |
|---|---|---|
| Account Opening | Rs. 200 - One time Digital KYC + Rs 300 Account Opening Charges | Rs. 300 ( Equity and Commodity) |
| Delivery Charges | Rs. 0.01/- per executed order | FREE |
| Intraday Charges | Rs. 10 or 0.05% of turnover | Rs. 20 or 0.03% per trade |
| Futures Charges | 0.02% of turnover or Rs. 10/- per Executed Order, whichever is lower | 0.03% or Rs. 20/executed order whichever is lower |
| Options Charges | Rs. 10/- per Executed Order | Rs. 20/- per Executed Order |
| AMC (Account Maintenance Charges) | Rs. 0 * | Rs. 300/ year + GST |
| Pledging Charges | Rs. 32 (including the depository transaction charges) | Rs. 60 + GST |
| DP (Depository participant) charges | Rs. 10/- per scrip per day | ₹13.5 + GST per scrip |
| Payment Gateway ( Net Banking) | Rs. 10 | Rs. 9 |
| Payment Gateway (UPI) | Rs. 0 | Rs. 0 |
*Paytm Charges Platform Fee of Rs 300 per annum
Also read: Zerodha Review 2020 – Should you trade with the biggest stockbroker in India?
Paytm Money Review – Limitations of Paytm Money
Paytm money stockbroking and its demat & trading accounts are still in the early phase and yet to be tested customer’s feedbacks and expectations. Anyways, here are a few limitations of Paytm Money that it is facing or will face in the future:
- No Offline Branch Support
- Paytm Money doesn’t offer Commodity and currency trading services for customers.
- Unlike the popular trading platforms like Zerodha or Upstox, which has been in the market for years, Paytm’s trading platform is yet to test handling large volumes and market volatility.
- Advanced order types like GTC (Good Till Cancelled) not available.
Closing Thoughts
By venturing into stockbroking Paytm has now become one of the most comprehensive wealth management platforms in the country. Their extensive existing customer base acts as their biggest leverage as they have access to the market not penetrated by other platforms. This can also be seen in the app which has a UI that is friendly and minimalistic, enhancing its approach.
Comparing Paytm to market leader Zerodha, the former makes financial inclusion a priority to suit its customer base. Zerodha on the other hand according to CEO Nitin Kamath caters to people who are more than just investors by offering a more evolved product.
Aron, Bachelors in Commerce from Mangalore University, entered the world of Equity research to explore his interests in financial markets. Outside of work, you can catch him binging on a show, supporting RCB, and dreaming of visiting Kasol soon. He also believes that eating kid’s ice-cream is the best way to teach them taxes.
