RBI tries to ensure Paytm’s UPI transactions continue to work after Paytm Payments Bank restrictions

The Reserve Bank of India said on Friday that it has asked the National Payments Corporation of India (NPCI) to consider a request by Paytm, formally known as One 97 Communications, to become a third-party application provider (TPAP).

If approved, it will allow Paytm to continue processing payments through India’s popular Unified Payments Interface (UPI), but will need a set of newly identified banks to support the app.

The NPCI is to facilitate four to five banks, with the capability to process large volumes of UPI payments, to act as service providers for Paytm, the RBI said on Friday.

“No new users should be added from the said TPAP until all existing users are satisfactorily migrated to a new handler,” RBI said.

Last month, the central bank asked Paytm Payments Bank, a Paytm associate, to wind down its business by March 15, leading to disruption of the popular payment app that uses the back-end banking unit.

Paytm is the third largest UPI payments app in the country, processing 1.6 billion monthly transactions, according to data available on the NPCI website. PhonePe and Google Pay are the two biggest.

To keep Paytm’s QR codes operational, the company may open current accounts with one or more banks, RBI said.

Paytm said last week that it has signed Axis Bank to act as a banking partner.

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