The way i see it, and also the way some of the higher ups told me before the announcement of who gets the payments bank licence (what he said was unbiased on whether we would get it or not), is that everyone applied for the licence just because it was an option, and not because anyone thought it through. Basically it was like, lets get the licence and then see how we make money with it.

But on analysing, how it was going to change us he said:

• Having it, would get us more regular users and those user's would have an incentive to park money in the wallet. Right now, if you put 5000 in your e-wallet then you are basically earning less interest for the convenience (just like your physical wallet though).

• If you talk about the unbanked sector in India, its huge. You can potentially give those guys a bank account and a debit card that they can use everywhere. So for people who have a bank, the company is a wallet and for people who were unbanked it still serves as a bank.

• Now lets come down to the companies that dont have the license. They aren't so behind in the game just because the main proposition is using e-wallets just like your wallet. And these integrations are still possible. All the limits are still possible via a KYC. They are just losing on the banking possibilities of the proposition.

• Why would unbanked people use payments bank? Because opening it, operating it would be easier. You dont need to open brick and mortar and thus you would be able to serve area's where banks haven't opened yet.

• Coming to the downside is you having a burn rate, no one is sure how you would sustain the rate of interest burn rate without lending out the money.

Hope this helps.

tl;dr: PB license allows a company to replace a bank for the unbanked sector. Normal wallets are just supposed to replace the physical wallet of users.