On February 22, One97 Communications, the parent company of Paytm, along with private sector lenders HDFC Bank and Yes Bank, jointly submitted an application to the National Payments Corporation of India (NPCI) to become a third-party application provider (TPAP) for the Unified Payments Interface (UPI) mobile payments platform.
Users of Paytm UPI linked to accounts with Paytm Payments Bank are advised to make alternative arrangements with other banks by March 15.
This move comes as reports surfaced earlier this week indicating that Axis Bank and Paytm had also filed a joint application with the NPCI to become TPAPs. Discussions between all three banks and the NPCI have been ongoing, with efforts aimed at expediting the process to ensure seamless utilization of the Paytm app for UPI payments.
In response to this development, the Reserve Bank of India (RBI) announced on February 23 that clients and merchants with ‘@paytm’ handles would be smoothly transitioned from PPBL to a new set of designated banks to mitigate any disruptions. Paytm is also engaged in discussions with ICICI Bank and Canara Bank regarding a TPAP partnership, although final agreements have yet to be reached.
The move towards transitioning UPI operations to new banking partners became necessary after the RBI imposed stringent restrictions on PPBL, directing the bank to suspend all services except for the withdrawal of remaining funds from accounts. This regulatory action has necessitated Paytm to seek partnerships with other banks to continue its UPI operations.
Previously, PPBL served as Paytm’s primary service provider (PSP) bank. However, with the mandated changes, Paytm will function as a TPAP, similar to its competitors in the market. TPAPs rely heavily on PSP banks to ensure efficient payment processing and minimize transaction failures. With approximately 90 million UPI users on its platform, Paytm aims to ensure a smooth transition to its new operational framework to maintain its position within India’s digital payments ecosystem.
