Paytm gets third-party UPI app license from NPCI as payments bank goes out of business

India’s digital payments firm Paytm, formally known as One 97 Communications, was granted a third-party application provider license by the country’s payments authority on Thursday, which will allow it to facilitate payments after its banking unit shuts down.

The license will allow customers to continue using the Paytm app to make payments through India’s popular Unified Payments Interface (UPI) after Paytm Payments Bank ceased operations by March 15, following regulatory action for non-compliance with certain norms.

Axis Bank, HDFC Bank, State Bank of India and Yes Bank will act as payment system provider banks for Paytm, the National Payments Corporation of India (NPCI) said in a statement.

Yes Bank will also act as the receiving merchant bank for existing and new UPI merchants for Paytm, he added.

Paytm has been advised to complete the migration for all existing manipulations and mandates, where necessary, to new payment system provider banks at the earliest, NPCI said.

UPI is India’s real-time payments system that allows users to transfer money between banks.

Paytm, the country’s third-largest UPI payments app, processed 1.41 billion monthly transactions worth Rs 1.65 trillion in February, down from 1.57 billion transactions worth Rs 1.93 trillion in January, according to data from the NPCI website.

PhonePe and Google Pay are the two largest UPI payment apps in India.

Last month, the Reserve Bank of India (RBI) asked the NPCI to consider a request by Paytm to become a third-party app provider.

Earlier this week, Reuters was the first to report that the NCPI was likely to approve a third-party application provider (TPAP) license for Paytm.

© Thomson Reuters 2024