New Delhi: In a significant development for digital payment users, the National Payments Corporation of India (NPCI) has authorized Paytm to function as a Third Party Application Provider (TPAP) for the Unified Payments Interface (UPI). This approval comes as a relief to Paytm’s parent company, One97 Communications Ltd., which can now operate under the multi-bank model in collaboration with Axis, HDFC, State Bank of India, and Yes Bank as partner banks.
NPCI’s Strategic Move:
NPCI has designated Yes Bank as the acquiring bank for both existing and new UPI customers of Paytm. This strategic move is expected to streamline payment processes and ensure the continuation of autopay services for Paytm users. Furthermore, NPCI has instructed Paytm to swiftly migrate all existing UPI handles and mandates to the newly appointed Payment Service Provider (PSP) banks.
Understanding TPAP:
The TPAP license is pivotal for Paytm as it allows customers to persist with UPI transactions via the Paytm app by linking bank accounts other than Paytm Bank. TPAPs are platforms that facilitate UPI payment services provided by NPCI, similar to other providers like PhonePe and Google Pay.
The Underlying Issue:
Previously, Paytm faced regulatory challenges when the Reserve Bank of India (RBI) imposed a ban on Paytm Payments Bank (PPBL), restricting it from onboarding new customers from February 29 and from accepting new funds after March 15. This posed a significant threat to the standard operations of Paytm’s widely-used payment app. With the latest NPCI approval, Paytm is set to circumvent these hurdles by partnering with new banks, thereby ensuring uninterrupted service to its vast user base.
