Paytm, formerly known as One 97 Communications, received a significant boost on Thursday as it was granted a third-party application provider license by India’s payments authority. This license comes at a crucial time for Paytm, allowing it to continue facilitating payments through India’s UPI system even after its banking unit, Paytm Payments Bank, ceases operations by March 15.
Acting as payment system provider banks, Axis Bank, HDFC Bank, State Bank of India, and Yes Bank will support Paytm in this transition, ensuring uninterrupted services for its customers. Yes Bank will also serve as a merchant acquiring bank for both existing and new UPI merchants associated with Paytm.
The NPCI has urged Paytm to swiftly migrate all existing handles and mandates to the new payment system provider banks. This development underscores the significance of UPI, India’s real-time payments system, in facilitating seamless money transfers across banks.
Despite a slight decline in transaction volumes from January to February, Paytm remains one of the top players in the UPI payments space, alongside PhonePe and Google Pay. The RBI’s directive to the NPCI to consider Paytm’s request for a TPAP license reflects the growing importance of digital payments in India’s financial landscape.
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Earlier reports had hinted at the likelihood of Paytm securing this license, signaling a positive outcome for the digital payments giant.
