The formal application, accompanied by a signed intent to collaborate, is anticipated to be submitted by both parties
NPCI is expected to fast-track the process to ensure a seamless experience for customers using the Paytm app for UPI payments
Following RBI's restrictions on Paytm Payments Bank Limited (PPBL), the company is seeking bank partnerships to support its UPI business
Fintech major paytm
’s operator One97 Communications will jointly apply with Axis Bank this week to be a third-party application provider (TPAP) with the National Payments Corporation of India (NPCI) for running Unified Payments Interface (UPI) on the mobile platform.
The NPCI, which is backed by the RBI, is an entity that oversees and regulates UPI. A TPAP licence allows a company to use another bank’s infrastructure to process UPI payments made through their platform.
Google Pay, PhonePe, and Amazon Pay, too, work similarly. These apps partner with banks as payment service providers (PSP) to ensure smooth transactions through the UPI channel.
As of now, Paytm is also in discussion with Yes Bank, HDFC Bank, ICICI Bank and Canara Bank, but the talks are yet to pan out.
Moneycontrol first reported the development.
Paytm Payments Bank has so far been operating as the payment service provider for UPI transactions through the Paytm wallet. However, on January 31, 2024, the RBI restricted all banking activities for Paytm Payments Bank, pushing One97 Communications to apply for a TPAP licence.
Axis Bank, on the other hand, already serves as a key payment provider for all major UPI players like Amazon Pay, Cred, Google Pay, and PhonePe.
The two sides are reported to have been in discussions with the NPCI over the past few days, and the application is likely to be formally submitted with a signed intent to collaborate.
The NPCI is expected to fast-track the process to ensure a seamless experience for customers using the Paytm app for UPI payments, the report added.
Until now, PPBL served as the PSP bank for One97. Paytm has around 90 Mn UPI users on its platform.
This comes three days after Paytm shifted the nodal account of Paytm Payments Bank to Axis Bank. However, it is also true that without a banking licence, Paytm’s business model would now become similar to pure payment service providers like PhonePe, Google Pay and others.
The apex bank cracked its whip on Paytm Payments Bank, barring it from taking any deposits or credit transactions or top-ups in any of its customer accounts.
The central bank also stopped the company from providing any banking services including UPI facility and fund transfers after February 29. This deadline was later extended to March 15.
The last few days have been worrisome for the company, with the shares of One97 Communications witnessing significant volatility, witnessing a more than 50% drop since January 31.
However, the Paytm stock breathed a sigh of relief after the RBI released FAQs and extended the deadline for business restrictions to March 15 from the earlier date of February 29.
The central bank clarified that Paytm QR codes, soundboxes, and card machines would remain operational post the March 15 deadline if merchants migrate to other banks.
