Paytm Gets NPCI Approval To Become a Third-Party UPI App

The National Payments Corporation of India (NPCI) has greenlit One97 Communications Limited (OCL), the parent company of Paytm, to join the Unified Payments Interface (UPI) services as a Third-Party Application Provider (TPAP) under the multi-bank model. This significant approval comes as Paytm's banking arm, Paytm Payment Bank Limited (PPBL), faces closure post-March 15 following regulatory actions.

Under the new arrangement, Paytm will collaborate with four major banks—Axis Bank, HDFC Bank, State Bank of India, and Yes Bank—who will serve as its Payment System Providers (PSPs). These PSPs facilitate the connection between the UPI app and the banking channel, with only banks eligible to act as PSPs.

According to reports from Moneycontrol, NPCI, the operator of UPI payments, is expediting the TPAP process with all banks to meet the March 15 deadline. Previously, Paytm operated UPI services through PPBL, which held the TPAP license. However, with the imminent closure of PPBL, Paytm now requires a separate TPAP license to continue its UPI operations, unlike its competitors like Google Pay, PhonePe, Cred, and Amazon Pay.

NPCI grants approval to One97 Communications Limited (OCL) to participate in UPI as a Third-Party Application Provider (TPAP) under multi-bank model.@dilipasbe

Read more here: https://t.co/XuJpyiiRNq

— NPCI (@NPCI_NPCI) March 14, 2024

Furthermore, Yes Bank will serve as the merchant acquiring bank for both existing and new UPI merchants associated with Paytm. The redirection of the '@Paytm' handle to Yes Bank

will ensure uninterrupted UPI transactions and AutoPay mandates for Paytm users and merchants, as stated by NPCI.

NPCI has urged Paytm to swiftly migrate all existing handles and mandates to new PSP banks as necessary. Paytm, positioned as the third-largest app for UPI payments in the country, recorded 1.41 billion monthly transactions worth Rs 1.65 lakh crore in February, a slight decrease from January's 1.57 billion transactions valued at Rs 1.93 trillion, according to NPCI data.

A vast majority of Paytm's transactions, constituting around 75 percent of gross merchandise value (GMV), are facilitated through UPI transactions on its app.