The National Payments Corporation of India (NPCI) has granted approval to One97 Communications Limited (OCL), the parent company of Paytm, to participate as a Third-Party Application Provider (TPAP) in the Unified Payments Interface (UPI) services under a multi-bank model.
This much-anticipated license will enable Paytm to continue offering UPI services to its app users, following the cessation of operations by its banking unit, Paytm Payment Bank Limited (PPBL), after March 15 due to regulatory action.
Under the new arrangement, Paytm will collaborate with four new banks—Axis Bank, HDFC Bank, State Bank of India, and Yes Bank—to provide the payment service. These banks will serve as its Payment System Providers (PSPs).
A PSP, being a bank, facilitates the connection between the UPI app and the banking channel.
NPCI, the entity overseeing UPI payments, has been collaborating with all banks to expedite the TPAP process by March 15.
Previously, Paytm provided this service through PPBL, which held the TPAP license. Since Paytm had its own bank, it did not require a separate TPAP license, unlike competing apps such as Google Pay, PhonePe, Cred, and Amazon Pay.
Furthermore, Yes Bank will serve as the merchant acquiring bank for Paytm's existing and new UPI merchants.
As a result, the Paytm handle will now redirect to Yes Bank, ensuring that existing users and merchants can continue UPI transactions and AutoPay mandates seamlessly and without interruption, according to NPCI.
NPCI has advised Paytm to swiftly migrate all existing handles and mandates, as needed, to the new PSP banks.
Paytm, ranked third among UPI payment apps in the country, processed 1.41 billion transactions valued at Rs 1.65 lakh crore in February, a slight decrease from 1.57 billion transactions worth Rs 1.93 trillion in January, as per NPCI data.
For Paytm, the majority of transactions and approximately 75 percent of gross merchandise value (GMV) originate from customers using UPI for transactions on its app.
