The National Payments Corporation of India has given Paytm, a leading financial services firm in the South Asian market, the green light to participate in the payments ecosystem as a third-party application provider, providing much-needed relief to the company and its millions of users and merchants. This comes as the Reserve Bank of India ordered Paytm’s parent firm One97 Communications to shut down its banking unit, Paytm Payments Bank, which processed majority of its transactions.
To continue operating, Paytm needed to obtain the third-party application provider license, which allows the company to offer payments through the popular UPI network. This license was granted by NPCI, with Axis, HDFC, State Bank of India, and Yes Bank as payment system providers for the Paytm app.
“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,” NPCI stated.
This means that existing users and merchants can continue to use the Paytm app for UPI transactions and AutoPay mandates without any disruptions. OCL, a subsidiary of Paytm, has been instructed to migrate all existing handles and mandates to the new PSP banks as soon as possible.
The Reserve Bank of India established NPCI, which collaborated with the country’s lenders to create UPI, a revolutionary system that allows individuals to transact with anyone in India using just their virtual payment address. This has made retail payments faster, more accessible, and cost-efficient.
The RBI, recognizing the importance of Paytm and the potential disruptions for its customers, advised NPCI to quickly issue the third-party application provider license, or TPAP, to Paytm.
