- The RBI has directed the National Payments Corporation of India (NPCI) to evaluate a request from Paytm to function as a third-party application provider (TPAP).
- If NPCI grants TPAP status to Paytm, the transition would necessitate migrating ‘@paytm’ handles seamlessly from Paytm Payments Bank to a new set of banks to prevent any service interruptions.
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To facilitate this migration, NPCI may certify 4-5 banks as Payment Service Provider (PSP) banks with demonstrated capabilities to process high-volume UPI transactions.
- Holders of FASTag and National Common Mobility Cards (NCMC) issued by Paytm Payments Bank are urged to make alternative arrangements before the stipulated deadline to avoid any inconvenience.
- The RBI stressed that these measures are aimed at safeguarding customers and the payment system from potential disruptions.
The Reserve Bank of India (RBI) has directed the National Payments Corporation of India (NPCI) to evaluate a request from Paytm, also known as One 97 Communications, to function as a third-party application provider (TPAP). This move comes after the central bank instructed Paytm Payments Bank, an affiliate of Paytm, to cease operations by March 15, causing disruptions to the popular payment app’s services, which relied on the banking unit’s infrastructure.
If NPCI grants TPAP status to Paytm, the transition would necessitate migrating ‘@paytm’ handles seamlessly from Paytm Payments Bank to a new set of banks to prevent any service interruptions. The RBI emphasized that no new users should be added until all existing users are satisfactorily migrated to the new handles.
To facilitate this migration, NPCI may certify 4-5 banks as Payment Service Provider (PSP) banks with demonstrated capabilities to process high-volume UPI transactions. This aligns with NPCI norms aimed at minimizing concentration risk. Additionally, for merchants utilizing PayTM QR Codes, Paytm Communication Ltd (OCL) may establish settlement accounts with one or more PSP Banks, distinct from Paytm Payments Bank.
However, this migration only pertains to customers and merchants with ‘@Paytm’ UPI handles. Those with UPI addresses or handles other than ‘@Paytm’ are not affected. Customers with underlying accounts or wallets held by Paytm Payments Bank are advised to make alternative arrangements with other banks before March 15, 2024, as previously recommended in RBI’s FAQs released on February 16, 2024.
Furthermore, holders of FASTag and National Common Mobility Cards (NCMC) issued by Paytm Payments Bank are urged to make alternative arrangements before the stipulated deadline to avoid any inconvenience.
The RBI stressed that these measures are aimed at safeguarding customers and the payment system from potential disruptions, emphasizing that they are taken in the best interest of all stakeholders. These actions are independent of any regulatory or supervisory actions initiated by RBI against Paytm Payments Bank, ensuring the integrity and stability of the financial ecosystem.
(With inputs from agencies)
