- ByStartupStory | March 15, 2024
In a strategic move ahead of impending regulatory restrictions, Paytm, operated by One97 Communications Ltd, has clinched the coveted Third-Party Application Provider (TPAP) license from the National Payments Corporation of India (NPCI). This development grants Paytm the authority to operate Unified Payments Interface (UPI) services under a multi-bank model, ensuring continuity in its digital payment offerings.
Under this arrangement, prominent financial institutions such as Axis Bank, HDFC Bank, State Bank of India, and Yes Bank will serve as Payment System Provider (PSP) banks to One97 Communications. Specifically, Yes Bank will act as the merchant acquiring bank for both existing and new UPI merchants associated with Paytm. The NPCI emphasized the seamless transition, assuring users and merchants of uninterrupted UPI transactions and AutoPay mandates.
The NPCI directive underscores the urgency for One97 Communications to swiftly migrate all existing handles and mandates to the new PSP banks. With this pivotal license, Paytm joins the ranks of esteemed TPAP license holders such as Google Pay, PhonePe, CRED, and slice, becoming the 25th entity to receive such accreditation.
This milestone assumes heightened significance against the backdrop of regulatory constraints imposed by the Reserve Bank of India (RBI) on Paytm Payments Bank Ltd (PPBL), effective March 15. As PPBL served as the conduit for transactions within the Paytm ecosystem, the RBI’s directives necessitated a strategic realignment. In response, Paytm forged alliances with Axis Bank and Yes Bank, relocating its nodal and merchant accounts, respectively, to ensure operational continuity.
The issuance of the TPAP license by the NPCI offers respite to Paytm amidst a tumultuous period marked by plummeting stock prices. Following the RBI’s regulatory intervention, Paytm witnessed a staggering 60% decline in its share value. Moreover, several mutual funds divested their holdings in Paytm’s parent company, signaling investor apprehension.
Despite these challenges, Paytm’s shares closed marginally higher at INR 353.25 on the Bombay Stock Exchange (BSE) today, reflecting investor optimism following the NPCI’s regulatory nod.
In light of the evolving regulatory landscape, Paytm’s proactive measures underscore its commitment to sustaining its position as a leading player in India’s burgeoning digital payments ecosystem. As the company navigates these regulatory headwinds, its partnerships with key financial institutions and adherence to regulatory guidelines position it favorably for continued growth and resilience in the dynamic fintech landscape.
“YES Bank shall also be acting as a 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,” reiterated the NPCI spokesperson, underscoring the seamless transition facilitated by Paytm’s strategic partnerships.
