SUMMARY
Axis Bank, HDFC Bank, State Bank of India, and Yes Bank will act as payment system provider banks to One97 Communications, the parent of Paytm
The licence will allow the fintech giant to operate UPI services under a multi-bank model
The nod from the NPCI comes just a day before the RBI’s curbs on Paytm Payments Bank kick in
A day before the Reserve Bank of India’s (RBI) curbs on Paytm Payments Bank Ltd (PPBL) kick in, One97 Communications Ltd, the parent of Paytm, has secured the Third-Party Application Provider (TPAP) licence from the National Payments Corporation of India (NPCI).
With the licence, the fintech major can operate UPI services under a multi-bank model. Axis Bank, HDFC Bank, State Bank of India, and Yes Bank will act as payment system provider (PSP) banks to One 97 Communications.
“YES Bank shall also be acting as merchant acquiring bank for existing and new UPI merchants for OCL. “@Paytm” handle shall be redirected to YES Bank. This will enable existing users and merchants to continue to do UPI transactions and AutoPay mandates in a seamless and uninterrupted manner,” the NPCI said in a statement.
The payments body said it has advised One97 Communications to complete migration of all existing handles and mandates, wherever required, to new PSP banks at the earliest.
With the licence, the fintech company can continue its Unified Payments Interface (UPI) operations through the aforementioned PSP banks. These banks are members of UPI that allow the transaction on the TPAP licence holder’s platform.
With NPCI’s nod, Paytm has become the 25th TPAP licence holder, joining the likes of Google Pay, PhonePe, CRED, and slice.
It is important to note that Paytm relied on PPBL to facilitate transactions on its app. With the RBI barring it from conducting any further bank-related operations post March 15, the Vijay Shekhar Sharma-led startup decided to partner with other PSP banks.
A little over two weeks after the regulatory action on PPBL, Paytm had announced that it shifted its nodal account to Axis Bank.
Subsequently, the fintech giant also signed a deal to move its merchant accounts to Yes Bank. The partnership between the two entities allows Paytm to onboard more merchants and users and leverage cross-selling opportunities in the long term.
The licence from the NPCI comes as a relief to Paytm. The company’s shares have crashed nearly 60% since the RBI’s announcement of its curbs on PPBL.
Further, six mutual funds completely divested their holdings in Paytm’s parent company last month, while another six significantly reduced their stakes. The total divestment stood at over 91 Lakh shares valued at INR 380 Cr by the end of February.
Shares of Paytm ended today’s trading session 0.4% higher at INR 353.25 on the BSE.
