Paytm gets third-party aggregator license from NPCI, YES Bank to take over @paytm

Listed fintech Paytm has received a third-party aggregator license from the National Payments Corporation of India, a day ahead of RBI’s deadline to restrict some of its operations.

This will allow for customers to make payments through Paytm’s Unified Payments Interface (UPI), even after its banking arm will no longer be eligible to operate on March 15 after the Reserve Bank of India took regulatory action due to non-compliance.

The banks which will now be payment system providers for Paytm include Axis Bank, HDFC Bank, State Bank of India and Yes Bank, NPCI said in a statement.

“@Paytm” handle shall be redirected to YES Bank. This will enable existing users and merchants to keep on using the digital payment app for UPI transactions and AutoPay “in a seamless and uninterrupted manner,” NPCI said.

NPCI said existing and new UPI merchants for Paytm will be acquired through Yes Bank. 

One97 Communications, the parent company of Paytm, must complete migration for all existing handles and mandates to the new PSP banks at the earliest, it added. 

Paytm FASTag users will no longer have the option to recharge or top-up their balance after March 15, 2024, the NHAI mandated ahead of the deadline.

Amid the clampdown of Paytm Payments Bank, Paytm announced a partnership with Axis Bank for its nodal account to settle merchant payments. This resulted in gains of upto 5 per cent for the second straight session on February 19. 

The granting of the third-party application provider license makes a significant development for Paytm, ensuring the continuity of its payment services for customers amid regulatory changes and the winding down of its banking operations.

Previously, there have been speculations around the operations of the Paytm wallet application along with all other services under the Paytm umbrella including Paytm Insider, Paytm FASTag, Paytm Bill Payment, Paytm Vouchers, and others. However, the company has repeatedly refused any hindrance in the operations of its other products.