Paytm gets regulatory nod to become third-party UPI app

National Payments Corporation of India (NPCI) granted approval to One97 Communications Limited (OCL) which is Paytm’s parent company to participate in UPI services as a third-party application provider (TPAP). Axis banks, HDFC banks, State Bank of India and YES Bank are the four banks that will act as partner banks for Paytm in order to aid the payment service.

“YES Bank shall also be acting as merchant acquiring bank for existing and new UPI merchants for OCL. “@Paytm” handle shall be redirected to YES Bank. This will enable existing users and merchants to continue to do UPI transactions and AutoPay mandates in a seamless and uninterrupted manner,” NPCI said in a statement.

The regulator also advised Paytm to complete migration for all existing handles and mandates, wherever required, to new PSP banks at the earliest. This would mean that people will still be able to use the Paytm app for transactions via UPI.

This development comes after a number of services are set to stop working after the 15^th of March as the Reserve Bank of India imposed restrictions on the Paytm Payments Bank Ltd. citing persistent non-compliance and continued material supervisory concerns on January 31, 2024. After March 15, Paytm Payments Bank Ltd has been barred by RBI from accepting fresh deposits or top-ups.

According to data available on the NPCI website, Paytm was the third-largest app for UPI payments processed around 1.41 billion monthly transactions worth 1.65 lakh crore in February which is less than the 1.57 billion transactions worth Rs 1.93 trillion in January. For Paytm, the vast majority of transactions and around 75 percent of gross merchandise value (GMV) come out of its customers using the popular UPI for transactions on its app.

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