Paytm Receives Approval from NPCI to Serve as a Third-Party Application Provider

paytm logo

Three points you will get to know in this article:

  • Paytm secures TPAP license from NPCI pre-RBI restrictions.
  • Shifts nodal and merchant accounts to Axis Bank, Yes Bank.
  • NPCI approval brings relief, stocks rise after regulatory challenges.

The Regulatory Changes and Obtaining the TPAP License

Just a day prior to the implementation of Reserve Bank of India’s restrictions on Paytm Payments Bank Ltd (PPBL), One97 Communications Ltd, the parent company of Paytm, has successfully obtained the Third-Party Application Provider (TPAP) license from the National Payments Corporation of India (NPCI).

This newly acquired license allows the fintech giant to offer UPI services using a multi-bank approach. Axis Bank, HDFC Bank, State Bank of India, and Yes Bank have been designated as the payment system provider (PSP) banks for One97 Communications.

Institutional Support and Seamless Transition

In a reassuring move, the NPCI has stated, “YES Bank will also serve as the merchant acquiring bank for both existing and new UPI merchants associated with OCL. The ‘@Paytm’ handle will be seamlessly redirected to YES Bank, ensuring uninterrupted UPI transactions and AutoPay mandates for our valued users and merchants.”

Strategic Banking Partnerships Post-RBI Restrictions

The payments organization has recommended One97 Communications to swiftly transfer all current accounts and authorizations, as needed, to new PSP banks.

Now that they’ve got the green light, the fintech company can keep running its Unified Payments Interface (UPI) services through these chosen PSP banks. These banks, being part of UPI, facilitate transactions on the TPAP license holder’s platform.

With the green light from NPCI, Paytm now holds the 25th TPAP license, rubbing shoulders with the big names like Google Pay, PhonePe, CRED, and slice.

It’s worth mentioning that Paytm leaned on PPBL to handle transactions through its app. However, after RBI’s restriction from engaging in further banking activities after March 15, the startup under Vijay Shekhar Sharma’s guidance opted to team up with other PSP banks.

Just a little over two weeks after PPBL faced regulatory action, Paytm made headlines by announcing its switch of nodal account to Axis Bank.

Financial Market Response and Stock Performance

over to Yes Bank. This collaboration between the two parties enables Paytm to welcome more merchants and users aboard, while also tapping into potential cross-selling opportunities in the foreseeable future.

Getting the green light from the NPCI comes as a big relief for Paytm. The company’s stocks took a nosedive of nearly 60% following the RBI’s announcement of restrictions on PPBL.

Moreover, six mutual funds completely sold off their holdings in Paytm’s parent company last month, while another six significantly trimmed down their investments. Altogether, over 91 lakh shares valued at INR 380 crore were divested by the end of February.

Closing today’s trading session, Paytm’s shares wrapped up 0.4% higher at INR 353.25 on the BSE.

One97 Communications, the parent company of Paytm, successfully secured the TPAP license from the NPCI just before RBI’s restrictions on PPBL. This license allows Paytm to offer UPI services through designated PSP banks like Axis Bank and Yes Bank. Amidst regulatory changes, Paytm swiftly transitioned its nodal and merchant accounts to these partners for uninterrupted operations. The NPCI’s approval marked a significant relief for Paytm after facing a stock decline of nearly 60%. The company’s strategic banking shifts aim to tap into new opportunities and enhance user experience in the fintech landscape.

Start typing and press Enter to search

Shopping Cart