Paytm Secures UPI Lifeline: Users Can Continue Transactions Seamlessly

15 Mar 2024 , 01:43 PM

On Thursday, One97 Communications (OCL), the company behind the Paytm brand, was granted permission by the National Payments Corporation of India (NPCI) to use the Unified Payments Interface (UPI) as a third-party application provider (TPAP).

Axis Bank, HDFC Bank, YES Bank, and State Bank of India (SBI) will serve as Paytm’s payment service providers (PSPs).

The approval is granted one day prior to the implementation of restrictions on Paytm Payments Bank by the Reserve Bank of India (RBI). The ruling suggests that Paytm customers may carry on completing UPI transactions through the app.

According to the NPCI, Paytm will function as a TPAP in a multi-bank framework. The “@Paytm” username will lead to YES Bank. According to a press release from the NPCI, “This will enable current users and merchants to continue doing UPI transactions and AutoPay mandates in a seamless and uninterrupted manner.”

According to the NPCI, YES Bank will function as a bank that acquires merchants for both new and current UPI merchants for OCL. For users of the company, @paytm is now a virtual payment address (VPA). Customers use it as a unique identification when sending and receiving money via UPI.

Paytm has been instructed by the NPCI to finish migrating all current handles and mandates to new PSP banks “as soon as possible.”

The RBI had instructed NPCI to take OCL’s request to become a TPAP into consideration for the app’s ongoing UPI operation last month.

The RBI had declared, “No new users are to be added by the said TPAP until the existing users are satisfactorily migrated to a new handle.”

The NPCI, which oversees the UPI ecosystem in India, defines a TPAP as a service provider that engages in UPI through a PSP bank. TPAPs, such as Google Pay, PhonePe, and Amazon Pay, are available in 24 countries.

Through the TPAP method, a number of banks, including Axis Bank, HDFC Bank, SBI, and ICICI Bank, help fintech startups.

Financial institutions including YES Bank, ICICI Bank, and Axis Bank offer VPAs to consumers who use PhonePe for UPI transactions. Each of their UPI handles ends in @ybl, @ibl, or @axl.

In terms of number and value of UPI transactions processed, Paytm Payments Bank app ranks third in the industry, after PhonePe and Google Pay.

The amount and value of transactions performed on the app decreased last month, according to data.

Based on NPCI data, the application handled 1,405.7 million transactions in February 2024, with a total value of around $1.65 trillion.  The app handled 1,569.63 million transactions in January, totaling around $1.92 trillion.

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