The National Payments Corporation of India (NPCI) has granted approval to One97 Communications Limited (OCL), the parent entity of Paytm, to operate as a Third-Party Application Provider (TPAP) for Unified Payments Interface (UPI) services. This pivotal move arrives amidst regulatory restrictions faced by Paytm Payment Bank Limited (PPBL) from the Reserve Bank of India (RBI), necessitating a shift in Paytm’s operational model for UPI services.
Under the newly forged arrangement, Paytm will collaborate with four major banks—Axis Bank, HDFC Bank, State Bank of India, and Yes Bank—as its Payment System Providers (PSPs). These banks will facilitate the connection between Paytm’s UPI app and the banking network, ensuring a seamless transaction process for users and merchants alike. Notably, Yes Bank will also serve as the merchant acquiring bank, centralizing Paytm’s UPI transactions under the “@Paytm” handle.
The NPCI’s directive mandates a swift migration of all existing UPI handles and autopay mandates to the new PSP banks, aiming for minimal disruption to Paytm’s vast user base. The transition is critical for maintaining the continuity of UPI transactions and services for both users and merchants, reinforcing Paytm’s commitment to providing uninterrupted payment solutions.
The approval by NPCI marks a significant development for Paytm, following a series of regulatory actions against PPBL by the RBI, including restrictions on its banking operations due to non-compliance issues. In response, Paytm has undertaken strategic measures, including discontinuation of inter-company agreements with PPBL and reconstitution of its board of directors, to ensure compliance and independent operation of its banking unit.
This development signifies a crucial step for Paytm in maintaining its position as a leading player in India’s digital payments landscape, particularly amidst recent challenges. The company’s ability to adapt and secure the TPAP license underscores its resilience and commitment to innovation. As Paytm joins the ranks of other TPAP license holders like Google Pay and PhonePe, it opens new avenues for growth and strengthens its ecosystem of financial services, promising a brighter future for its users, merchants, and stakeholders.
