Paytm Secures UPI Future As NPCI Gives Nod To Become Third Party App

In a sigh of relief for Paytm, which has seen several setbacks in the new year, the National Payments Corporation of India (NPCI) has granted approval to Paytm to become a third-party UPI app.

NPCI has given nod to One97 Communications Limited (OCL), the parent company of Paytm, to participate in Unified Payments Interface (UPI) services as a Third-Party Application Provider (TPAP) under a multi-bank model. This approval comes just a day before the deadline set by the Reserve Bank of India for Paytm Payments Bank.

"Now, officially your Paytm UPI will work! We have received approval from @NPCI_NPCI to participate in UPI as a Third-Party Application Provider (TPAP) under multi-bank model," Paytm said in a tweet.

In a tweet on X, Vijay Shekhar Sharma, Founder, Paytm thanked NPCI for the approval.

Thank you @NPCI_NPCI, committed to grow @UPI_NPCI to the new heights together @dilipasbe.

🙏🏼 🇮🇳🚀#PaytmKaro https://t.co/x6ilBq2aPJ

— Vijay Shekhar Sharma (@vijayshekhar) March 14, 2024

Continuation of UPI Services - New Partnership with Banks

This much-awaited license ensures that Paytm can continue offering UPI services to its app users even after the regulatory actions against its banking arm, Paytm Payment Bank Limited (PPBL), which is set to cease operations post-March 15.

Under the new model, Paytm will collaborate with four prominent banks - Axis Bank, HDFC Bank, State Bank of India, and Yes Bank - who will serve as its Payment System Provider (PSP). These banks will facilitate the connection between the UPI app and the banking channel, a crucial role in the payment ecosystem.

What is the Migration Process?

NPCI has advised Paytm to swiftly migrate all existing handles and mandates to the new PSP banks. Yes Bank, one of the partner banks, will also serve as the merchant acquiring bank for both existing and new UPI merchants associated with Paytm.

"This will enable existing users and merchants to continue to do UPI transactions and AutoPay mandates in a seamless and uninterrupted manner," NPCI said in a statement.

As part of this transition, the "@Paytm" handle will be redirected to Yes Bank. This move aims to ensure uninterrupted UPI transactions and AutoPay mandates for existing users and merchants.

Transaction Statistics

Despite recent fluctuations in transaction volumes, Paytm remains one of the leading platforms for UPI payments in India. According to data from the NPCI website, Paytm, the third-largest app for UPI payments in the nation, handled 1.41 billion transactions totaling Rs 1.65 lakh crore in February. This marks a decrease from January's figures, where Paytm processed 1.57 billion transactions valued at Rs 1.93 trillion.

With NPCI's approval and the establishment of partnerships with four major banks, this development secures Paytm with the continuity of its UPI services.

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