Indian digital payments giant Paytm, formerly One 97 Communications, received a significant boost on Thursday as the country’s payments authority granted it a third-party application provider license. This pivotal development allows Paytm to sustain its payment services via India’s popular unified payment interface (UPI) following the impending closure of its banking arm by March 15, due to regulatory non-compliance.
Under the licensing arrangement, Axis Bank, HDFC Bank, State Bank of India, and Yes Bank will serve as payment system provider banks for Paytm, as confirmed by the National Payments Corporation of India (NPCI). Additionally, Yes Bank assumes the role of a merchant acquiring bank for both existing and new UPI merchants associated with Paytm.
NPCI has directed Paytm to expedite the migration of all existing handles and mandates to the new payment system provider banks promptly. This directive underscores the urgency of transitioning Paytm’s operations seamlessly to ensure uninterrupted services for its vast user base.
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UPI, India’s real-time payments ecosystem, enables swift money transfers across different banks, making it a cornerstone of digital payments in the country. Despite a slight dip in transaction volumes from January to February, Paytm remains the third-largest UPI payment app, processing billions of rupees worth of transactions monthly.
The approval of Paytm’s third-party application provider license follows a directive from the Reserve Bank of India (RBI) to the NPCI to evaluate Paytm’s request. Reuters had earlier reported the likelihood of NPCI granting this pivotal license, setting the stage for Paytm’s continued operations amidst regulatory challenges.
