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The operator of India’s Unified Payments Interface (UPI) has granted Paytm a new permission to serve as a third-party application provider (TPAP), securing continued access to the network for Paytm customers.
On Thursday (March 14), the National Payments Corporation of India (NPCI) confirmed that it has granted a new approval to One97 Communications Limited (OCL), the parent company of Paytm.
The approval allows OCL to participate in the UPI instant payments network as a third-party application provider (TPAP) under a multi-bank model.
Four banks - Axis Bank, HDFC Bank, State Bank of India and YES Bank - will act as payment service providers (PSPs) for OCL across the network.
YES Bank will also act as a merchant acquiring bank for new and existing Paytm merchants on UPI.
“This will enable existing users and merchants to continue to do UPI transactions and AutoPay mandates in a seamless and uninterrupted manner,” said the NPCI.
“OCL has been advised to complete migration for all existing handles and mandates, wherever required, to new PSP banks at the earliest.”
In addition, Axis Bank was already named as Paytm’s new nodal account provider on February 16.
Paytm users will be able to receive new UPI handles provided by YES Bank and Axis Bank.
So far, YES Bank has gone live with the “@ptyes” handle and Axis Bank has gone live with the “@ptaxis” handle, but only among a limited number of users.
Tamal Bandyopadhyay, an Indian financial columnist and author, also posted on X that the NPCI has also approved the “@pthdfc” and “@ptsbi” handles, but these have not yet gone live.
“Our users can continue to use their ‘@Paytm’ UPI handle linked with a different bank account without interruption,” said Paytm.
“This aligns perfectly with our steadfast commitment to delivering a seamless payment experience for all our customers and merchant partners.”
UPI lives on for Paytm customers
The TPAP permission ensures that all Paytm customers can continue to use UPI beyond the shutdown of Paytm Payments Bank, which took place on March 15.
Source: Abhisek Yadav, X.com
In January, as covered by Vixio, the Reserve Bank of India (RBI) ordered Paytm Bank to wind down its operations due to “persistent non-compliance”.
Initially, Paytm Bank was told to stop accepting deposits and stop processing credit transactions by February 29.
However, as the deadline neared, the RBI was forced to grant a two-week extension in order to ensure that UPI service would not be disrupted.
Just as the RBI ordered
The TPAP permission granted to OCL aligns with recommendations issued by the RBI.
In the RBI’s deadline extension order, the central bank suggested that four or five banks with “demonstrated capabilities” to process high volumes of UPI transactions should serve as PSPs to the new TPAP.
As per NPCI data for February 2024, Paytm is now working with three of the top seven UPI remitter banks in terms of total volume transacted.
Source: NPCI
Last month, Paytm Bank itself was the tenth largest UPI remitter bank, while YES Bank was 23rd largest.
Since the shutdown of Paytm Bank on March 15, investors have welcomed Paytm’s new-look arrangements for UPI.
In the four trading sessions since the shutdown, the stock of Paytm parent company OCL has risen 21 percent.
However, OCL stock is still 46 percent lower than it was on the day before Paytm received the shutdown order.
