RBI’s New Measures to Safeguard Paytm Users and Merchants

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Three points you will get to know in this article:

  • RBI introduces measures supporting customers using the ‘@paytm’ handle, aiming to reduce concentration risk in the UPI system.
  • OCL wants to be a UPI provider for Paytm and switch ‘@paytm’ to other banks.
  • Paytm Payments Bank extends deadlines and introduces SoundPod for QR payments.
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Introduction: Reserve Bank on India

India’s banking system is overseen by RBI, which serves as the central bank and regulatory body for the country. It belongs to the Ministry of Finance, Government in India. It is accountable for the management, distribution, and upkeep of the Indian currency. It oversees the country’s primary financial systems and contributes to its economic growth. Moreover, In Mysore and Salboni, two currency printing presses are used by BRBNM, a specialized unit of RBI, to print INR notes. To promote and regulate the payment and settlement systems in India, the RBI collaborated with the Indian Banks’ Association to create the National Payments Corporation of India. A specialized division of RBI, the Deposit Insurance and Credit Guarantee Corporation, was established to offer deposit insurance as well as credit facility guarantees to all Indian banks.

RBI's Proactive Measures for '@paytm' UPI Handles

The recent announcement from the Reserve Bank of India (RBI) introduces additional measures in response to its ongoing actions concerning Paytm Payments Bank. These measures are geared towards supporting customers utilizing the ‘@paytm’ handle under the management of Paytm Payments Bank. The RBI’s focus is on reducing what it terms as a “concentration risk” within the UPI system by fostering the involvement of multiple payment app providers.

As a reminder, Paytm Payments Bank is under restrictions from accepting further credits into its customer accounts and wallets after March 15, 2024.

Transition Plan for '@paytm' Handles

In its latest notice, the RBI has directed the NPCI, responsible for overseeing the UPI, to assess One97 Communication Ltd’s (OCL) request to serve as a Third-Party Application Provider (TPAP) for the UPI channel. This move aims to ensure seamless UPI operations for the Paytm app, aligning with regulatory standards.

Once the OCL secures the TPAP status, it’s crucial to smoothly transition the ‘@paytm’ handles from Paytm Payments Bank to a carefully selected group of new banks to prevent any disruptions. During this transition period, new users won’t be able to join TPAP until the migration process wraps up.

“To ensure a seamless transfer of ‘@paytm’ handles to alternative banks, NPCI might certify 4-5 banks as Payment Service Provider (PSP) Banks. These banks will showcase their ability to handle large volumes of UPI transactions, aligning with NPCI guidelines to reduce risk,” the bank explained.

It’s important to note that handle migration applies solely to customers and merchants utilizing the ‘@paytm’ UPI handle. If you have a different UPI address or handle unrelated to ‘@paytm’, no action is necessary.

“In a similar vein, customers whose accounts or wallets are currently held with Paytm Payments Bank are encouraged to make alternative arrangements with other banks well ahead of the March 15, 2024 deadline,” the bank suggested.
These recent measures come shortly after the central bank eased restrictions for affected customers of Paytm Payments Bank.

Extension and Easing of Restrictions for Paytm Payments Bank Customers

The RBI has extended the previously set deadline of February 29, 2024, to March 15, 2024, allowing additional time for deposits, credit transactions, or top-ups in customer accounts, prepaid instruments, wallets, FASTags, National Common Mobility Cards, and other services. The extension also applies to banking services such as fund transfers, BBPOU, and UPI facilities.

Google Unveils SoundPod for QR Code Payments

Google unveiled on Thursday its latest innovation, the SoundPod, a nifty audio tool designed to assist merchants in monitoring QR code payments. With intuitive audio cues upon payment reception, the SoundPod is set to roll out gradually to small-scale merchants throughout India in the upcoming months. Interestingly, it shares striking resemblances to its counterparts, the Paytm Soundbox and the PhonePe SmartSpeaker.

The Reserve Bank of India (RBI) has introduced measures to support customers using the ‘@paytm’ handle managed by Paytm Payments Bank, aiming to reduce “concentration risk” within the UPI system. This includes transitioning ‘@paytm’ handles from Paytm Payments Bank to a selected group of new banks to prevent disruptions, with NPCI potentially certifying 4-5 banks as Payment Service Provider (PSP) Banks for a seamless transfer. Additionally, the RBI extended the deadline to March 15, 2024, for deposits, credit transactions, and other services for affected customers. Google also introduced the SoundPod, designed to help merchants monitor QR code payments, set to launch gradually for small-scale merchants in India.

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