The National Payments Corporation of India (NPCI) has officially granted One97 Communications Limited, the parent company of Paytm, the license to operate as a Third-Party Application Provider (TPAP) for Unified Payments Interface (UPI) services. This pivotal approval enables Paytm to continue offering UPI payment services under a multi-bank model, ensuring its vast user base can continue to enjoy seamless digital transactions.
Key Highlights:
- NPCI grants Paytm approval to become a third-party UPI app.
- Paytm to partner with four banks—Axis Bank, HDFC Bank, State Bank of India, and YES Bank—as Payment System Providers (PSPs).
- YES Bank also to serve as the merchant acquiring bank for new and existing UPI merchants under One97 Communications.
- The “@Paytm” UPI handle will be redirected to YES Bank, allowing for uninterrupted UPI transactions and AutoPay mandates.
- NPCI has advised Paytm to quickly migrate all existing handles and mandates to the new PSP banks.
Comprehensive Overview
The Approval and Its Significance
The NPCI’s approval marks a significant milestone for Paytm, allowing it to function as a third-party app for UPI payments amidst regulatory challenges. This move comes after Paytm Payments Bank was restricted from onboarding new customers and ceased operations, necessitating a shift in strategy to ensure uninterrupted service for its customers and merchants.
The Role of Partner Banks
Under the new framework, four leading banks—Axis Bank, HDFC Bank, SBI, and YES Bank—will act as PSPs, facilitating the linkage between Paytm’s UPI services and the banking network. This collaboration ensures that Paytm’s UPI service remains robust and compliant with regulatory standards.
Impact on Paytm Users and Merchants
For Paytm users and merchants, this transition is designed to be seamless, with minimal disruption to their daily digital transactions. The migration of the “@Paytm” handle to YES Bank is a key step in maintaining continuity in UPI transactions and AutoPay mandates, ensuring that Paytm’s services remain reliable and efficient.
NPCI’s Role and Future Directions
The NPCI’s decision underscores its commitment to fostering a competitive and inclusive digital payments ecosystem in India. By enabling more players to offer UPI services, NPCI aims to enhance the user experience, promote innovation, and ensure the long-term sustainability of India’s digital payments landscape.
