New Delhi: In a relief for Paytm UPI users, the Reserve Bank of India (RBI) has asked the National Payments Corporation of India (NPCI) to take necessary steps to maintain Paytm’s UPI service, even as the Paytm Payments Bank is set to close from March 15. The central bank has issued an advisory to NPCI, asking it to provide the facility of certification of 4-5 banks that can handle high-volume UPI transactions as payment service providers (PSPs) for Paytm.
The RBI’s move comes as per its instructions to shut down the Paytm Payments Bank, which was found to be violating the norms for small finance banks. The Paytm Payments Bank, which was launched in 2017, was offering savings and current accounts, debit cards, and other banking services to its customers. However, the RBI had imposed several restrictions on the bank, such as limiting the deposits to ₹1 lakh per customer, barring it from issuing credit cards or lending money, and requiring it to maintain a minimum net worth of ₹100 crore at all times.
How will this affect Paytm UPI users?
Paytm UPI is a service that allows users to make instant and secure payments using their mobile phones, without the need of a bank account or card details. Paytm UPI is integrated with the Paytm app, which also offers other services such as mobile recharge, bill payments, online shopping, and more. Paytm UPI is powered by the Paytm Payments Bank, which acts as a third-party application provider (TPAP) for UPI transactions. A TPAP is an entity that facilitates UPI transactions through its app but does not directly participate in the settlement process. The settlement is done by the PSPs, which are the banks that are approved by NPCI to offer UPI services.
With the closure of the Paytm Payments Bank, Paytm UPI users will have to link their UPI accounts with another bank account, to continue using the service. Currently, many customers use UPI through Paytm Payments Bank, which offers them a virtual payment address (VPA) with the suffix @paytm. If a Paytm Payment Bank customer does not link his UPI account with another bank before March 15, he will not be able to initiate or receive UPI transactions.
What are the options for Paytm UPI users?
The RBI has asked NPCI to help Paytm UPI users in transferring their accounts to other banks so that they can continue using the service without any interruption. NPCI is the umbrella organization that oversees the UPI system and regulates the PSPs and TPAPs. The RBI has said that NPCI should help in providing the option of 4 to 5 banks to Paytm users, so that they can easily link their UPI account to the new bank and continue their UPI service after March 15.
The RBI has also given an extension of 15 days to the Paytm Payments Bank, to continue its services till March 15, 2024. Earlier, the RBI had announced to ban on the services of the bank after February 29, 2024. The RBI had ordered the bank to stop taking new deposits and credit transactions after February 29 and to return the existing deposits to the customers by March 15. However, after receiving requests from the bank and its customers, the RBI has granted some more time to the bank to wind up its operations.
The RBI’s decision to support Paytm UPI service is good news for the millions of Paytm users, who rely on the service for their daily payments. Paytm UPI is one of the most popular UPI apps in the country, with over 200 million registered users and over 1.2 billion monthly transactions. Paytm UPI is also known for its cashback and rewards offers, which attract more users to the platform. The RBI’s move will ensure that Paytm UPI users do not face any inconvenience or disruption in their payments, and can continue to enjoy the benefits of the service.
