One 97 Communications, Paytm’s parent company, has received approval from the National Payments Corporation of India (NPCI) to resume onboarding new users for its Unified Payments Interface (UPI) services.
This decision followed several months, during which Paytm’s onboarding process was suspended due to restrictions.
The approval from NPCI, announced on October 22, allows Paytm to onboard new UPI users, but only if the company adheres strictly to NPCI’s guidelines, reports Moneycontrol.
These directives include complying with regulations regarding risk management, adhering to brand guidelines for the app and its QR code system, and following rules related to customer data management.
Paytm is also required to meet NPCI’s stipulations on muti-bank guidelines and the Third Party Application Providers (TPAP) market share.
This marks a pivotal moment for Paytm, which faced significant operational challenges earlier this year after the Reserve Bank of India (RBI) imposed restrictions on its associate entity, Paytm Payments Bank Limited (PPBL). In January and February, the RBI barred PPBL from onboarding new users to UPI services due to concerns about compliance.
As PPBL powered Paytm’s UPI services, this regulatory action effectively forced Paytm to halt adding new UPI users.
In response to the RBI’s measures, Paytm shifted its UPI infrastructure to a third-party model, enlisting the services of several prominent banking partners. To replace PPBL, Paytm secured partnerships with major banks, including Axis Bank, Yes Bank, State Bank of India (SBI), and HDFC Bank.
These banks now act as Paytm’s payment service providers (PSPs) within the TPAP framework, connecting Paytm’s UPI platform to India’s broader banking network.
The company’s collaboration with multiple banks could help diversify its UPI infrastructure, making it more resilient to future disruptions. Moreover, Paytm’s return to onboarding new UPI users could bolster its broader financial services ecosystem, which includes mobile payments, financial products, and a suite of merchant services.
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