The National Payments Corporation of India on Thursday said it granted approval to One97 Communications Limited (OCL), Paytm’s parent entity, a third-party application provider (TPAP) licence. This move comes as Paytm’s banking unit faces closure, necessitating alternative arrangements for facilitating payments.
The TPAP licence empowers Paytm to continue offering payment services through its app, utilising India’s widely used Unified Payment Interface (UPI). Paytm Payments Bank is slated to cease operations by March 15, following regulatory actions prompted by non-compliance with certain norms.
According to a statement from the National Payments Corporation of India (NPCI), Axis Bank, HDFC Bank, State Bank of India, and YES Bank will serve as payment system provider banks for Paytm. Additionally, YES Bank will act as a merchant acquiring bank for both existing and new UPI merchants associated with Paytm.
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The NPCI has instructed Paytm to swiftly migrate all existing handles and mandates to the new payment system provider banks. This transition is crucial for ensuring uninterrupted payment services for Paytm users.
UPI, India’s real-time payments system, facilitates seamless money transfers across various banks. Despite recent fluctuations in transaction volumes, Paytm remains the third-largest UPI payment app in the country. In February alone, Paytm processed 1.41 billion transactions worth 1.65 trillion rupees, according to NPCI data.
PhonePe and Google Pay currently dominate the UPI payments market in India.
This development follows a recent directive from the Reserve Bank of India (RBI) to the NPCI to assess Paytm’s request to operate as a third-party application provider. Earlier reports from Reuters indicated that NPCI was likely to approve Paytm’s TPAP license request.
The granting of the TPAP license to Paytm underscores the company’s commitment to ensuring seamless payment services for its vast user base amidst regulatory challenges.