Paytm secures NPCI approval to operate as third-party UPI app
The National Payments Corporation of India (NPCI) has given the green light to One97 Communications Limited, the parent company of Paytm, to function as a Third-Party Application Provider (TPAP) for Unified Payments Interface (UPI) services. This approval allows Paytm to operate under a multi-bank model. The license will also allow customers to continue using the Paytm app for payments through UPI after Paytm Payments Bank ceases operations on Friday (March 15).
4 banks will serve as PSPs
Four banks—Axis Bank, HDFC Bank, State Bank of India, and YES Bank—will serve as Payment System Providers (PSPs), powering Paytm's payment service. In addition to being one of the partner banks, YES Bank will also serve as the merchant acquiring bank for both existing and new UPI merchants for One97 Communications Limited. The "@Paytm" handle will be redirected to YES Bank to ensure uninterrupted UPI transactions and AutoPay mandates for users and merchants, the NPCI confirmed.
NPCI advises Paytm on migration of existing handles
Further, the NPCI has advised Paytm to expedite the migration process for all existing handles and mandates to the new PSP banks. The timeline for this migration, however, has not been specified by the NPCI in its statement. Last month, the Reserve Bank of India (RBI) urged the NPCI to look into Paytm's request to become a third-party application provider.
NPCI's judgment comes a day before the RBI's deadline
The NPCI's judgment comes one day before the RBI's deadline for Paytm Payments Bank Ltd. (PPBL) customers and merchants to transfer their accounts to other banks. On January 31, the RBI implemented these restrictions, citing repeated violations of norms and non-compliance with multiple rules. It barred PBBL from accepting new deposits or top-ups after February 29, 2024. The deadline was later extended by 15 days to March 15.