NPCI approves Paytm parent company to join as a UPI third-party app

The National Payments Corporation of India (NPCI) on Thursday approved One97 Communications Ltd, the parent company of Paytm, to join Unified Payments Interface (UPI) as a Third-Party Application Provider (TPAP) under the multi-bank model.

According to a press release, four banks, namely Axis Bank, HDFC Bank, State Bank of India, and YES Bank, will serve as Payment System Provider (PSP) banks for the fintech company. Additionally, YES Bank will also act as the merchant acquiring bank for existing and new UPI merchants associated with One97.

The "@Paytm" handle will be directed to YES Bank, ensuring a seamless transition for existing users and merchants to continue their UPI transactions and AutoPay mandates without any disruption, NPCI said.

The Vijay Shekhar Sharma-led company has received guidance to swiftly migrate all existing handles and mandates to the new PSP banks as needed.

Last month, the Reserve Bank of India (RBI) instructed the NPCI to consider One97 Communication Ltd as a TPAP for UPI transactions.

The RBI advised NPCI to certify four to five banks as PSPs capable of handling high-volume UPI transactions to facilitate the seamless migration of the '@paytm' handle to other banks.

The directive was aimed to ensure the continuity of UPI transactions through the Paytm app while reducing concentration risk in the UPI system by promoting multiple payment app providers, the RBI has said in a statement.

The development comes a day before the RBI's directive for the Paytm Payments Bank (PPBL) to suspend accepting deposits comes into effect after the central bank found lapses in its KYC standards.

PPBL is prohibited from providing banking services beyond withdrawals after March 15, 2024, except for fund transfers necessary for customer withdrawal purposes.