RBI Advises NPCI To Consider Paytm Request To Become Third Party UPI Service Provider
Mumbai: The Reserve Bank of India (RBI) on Friday said that it has advised the National Payments Corporation of India (NPCI) to examine One97 Communication’s request to become a Third-Party Application Provider (TPAP) for continued UPI operations of the Paytm application. If NPCI grants the TPAP licence to Paytm, UPI accounts with ‘@paytm’ handles will need to be migrated in a seamless manner from Paytm Payments Bank (PPBL) to a set of newly identified banks to avoid any disruptions. The RBI said that NPCI may facilitate certification of 4-5 banks as Payment Service Provider (PSP) Banks with demonstrated capabilities to process high volume UPI transactions.
According to reports, after shifting its nodal accounts to Axis Bank, One97 Communications that owns the brand Paytm and private sector lenders HDFC Bank and Yes Bank have jointly applied to be a TPAP with the NPCI for running the UPI.
“As the Paytm Payments Bank cannot accept further credits into its customer accounts and wallets after March 15, 2024, certain additional steps have become necessary to (i) ensure seamless digital payments by UPI customers using ‘@paytm’ handle operated by the Paytm Payments Bank, and (ii) minimise concentration risk in the UPI system by having multiple payment app providers,” said the central bank in a statement.
The TPAP licence is required to run UPI services and facilitate merchant transactions through partner banks post the RBI deadline of March 15, 2024.
As of January 2024, Paytm Payments Bank was the third-largest platform for UPI payments after PhonePe and Google Pay. It processed 157 crore transactions worth Rs 1.9-lakh crore during the month, accounting for a market share of 12.7 per cent in terms of volumes and 10.3 per cent in terms of the value of UPI transactions.
Meanwhile in another development, the RBI permitted authorised bank and non-bank Prepaid Payment Instruments (PPI) issuers to issue PPIs for making payments across various public transport systems. The central bank said that the move will provide convenience, speed, affordability, and safety of digital modes of payment to commuters for transit services.
