The National Payments Corporation of India (NPCI) has granted Paytm parent One 97 Communications (OCL) licence to participate in UPI as a third-party application provider. The announcement comes just a day before Paytm Payments Bank (
PPBL
) deadline is set to get over on March 15. In a major action against Paytm Payments Bank (PPBL), Reserve Bank of India (RBI), on January 31, directed it to stop accepting deposits or top-ups in any customer accounts, wallets, Fastags and other instruments after February 29.
Later, this deadline was extended to March 15. The direction is said to follow persistent non-compliance and continued material supervisory concerns, the central bank said in a statement. Here’s what NPCI licence means for
Paytm users
and merchants
What the third-party application provider licence means
NPCI licence to Paytm will allow Paytm’s request to participate in UPI as a third-party application provider (TPAP), enabling the company to facilitate payments after its banking unit shuts down. With this, Paytm will essentially become a payments platform like Walmart Inc-owned rival PhonePe and Google’s GPay that also depend on other banks’ networks.
Which are the four partner banks
The four partner banks are: Axis Bank Ltd, HDFC Bank Ltd, State Bank of India Ltd and Yes Bank.
What the licence means for Paytm users
The licence will allow Paytm’s customers to continue using the app for payments through Unified Payment Interface (UPI).
What is the biggest change
Until now, Paytm has operated under a licence connected to its affiliate Paytm Payments Bank (PPBL), which it doesn’t control but which has run its digital wallets and payments traffic. But that bank has to cease its business after Friday (March 15) following regulatory orders.
What happens to @paytm handle now
NPCI said that ‘@Paytm’ handle would be redirected to YES Bank, “enabling existing users and merchants to continue to do UPI transactions and autoPay mandates” in a seamless and uninterrupted manner.
Banking sources told Times of India that the switchover will be smooth and phased, as the @paytm handle will be retained. However, instead of pointing to PPBL, these handles will point to one of the four banks for settlement.Sources said that PPBL’s system would also continue to function after March 15 as customers would be able to operate their accounts for withdrawal, and the bank would have to continue providing UPI services to facilitate withdrawal.
What happens to merchants with PPBL account
On the merchant side, those who have a current account with PPBL are being individually migrated to other banks. The company has already opened a nodal account with Axis Bank and will open accounts with other banks soon. “Yes Bank shall also be acting as merchant acquiring bank for existing and new UPI merchants for OCL,” NPCI said.
