RBI Moves to Ensure UPI Transactions on Paytm Continue to Work After Strictures on Paytm Payments Bank

Paytm processes 1.6 billion monthly transactions in India and it is the country's third largest app for UPI payments after PhonePe and Google Pay.

By Reuters | Updated: 23 February 2024 19:46 IST

RBI Moves to Ensure UPI Transactions on Paytm Continue to Work After Strictures on Paytm Payments Bank

Photo Credit: Reuters

RBI recently extended the wind-down date for Paytm Payments Bank to March 15

Highlights

RBI has asked NPCI to consider Paytm's request to be a TPAP
This would allow Paytm to continue processing UPI payments in India
The RBI recently directed Paytm Payments Bank to wind down by next month

The Reserve Bank of India said on Friday it has asked the National Payments Corporation of India (NPCI) to examine a request from Paytm, formally known as One 97 Communications, to become a third party application provider (TPAP).

If approved, this would allow Paytm to continue processing payments via India's popular unified payments interface (UPI), but will need a set of newly identified banks to back the app.

The NPCI should facilitate four to five banks, with an ability to process high volumes of UPI payments, to act as service providers to Paytm, the RBI said of Friday.

"No new users are to be added by the said TPAP until all the existing users are migrated satisfactorily to a new handle," the RBI said.

Last month, the central bank asked Paytm Payments Bank, an associate of Paytm, to wind down its business by March 15, leading to disruption for the popular payment app, which used the banking unit at the back end.

Paytm is the third largest app for UPI payments in the country, processing 1.6 billion monthly transactions, according to data available on the NPCI website. PhonePe and Google Pay are the two largest.

To keep Paytm QR codes running, the company may open settlement accounts with one or more banks, the RBI said.

Paytm said last week it had signed on Axis Bank to act as a banking partner.

© Thomson Reuters 2024

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