Before we go further let us first understand what a payments bank is. Payments bank (PB) are the banks visualised by the RBI back in the year 2013-14. These type of banks can only receive deposits and remittances and can only offer withdrawal services to its customers. Where as traditional banks can offer all banking and financial services to the clients. Now the question arises where to invest our valuable money ?. In case of a PB you will not get facilities of loan, mutual funds, etc. Your money would only receive interest and would remain idle over there and it would only be good for withdrawal purpose. Whereas in case of traditional banks you receive all banking and financial services that too you may be entitled to certain relaxations as the case may be. Therefore in my opinion investing in traditional banking is preferable.