Paytm receives NPCI approval to onboard new UPI users

Paytm has received approval from the National Payments Corporation of India to onboard new UPI users, following earlier restrictions by the Reserve Bank of India. This development is expected to bolster Paytm's position in the digital payments sector.

In a significant development for Paytm, the National Payments Corporation of India (NPCI) has granted the fintech firm approval to onboard new Unified Payments Interface (UPI) users. This decision comes as a welcome relief for Paytm, which faced challenges earlier this year due to restrictions imposed by the Reserve Bank of India (RBI) on its associate company, Paytm Payments Bank Limited (PPBL).

In March 2024, according to PTI, the NPCI had initially allowed Paytm to participate in UPI as a Third-Party Application Provider (TPAP). This approval enabled Paytm to continue UPI transactions with four major banks: State Bank of India (SBI), Axis Bank, HDFC Bank, and YES Bank. The new approval, communicated to Paytm in a letter dated October 22, 2024, requires the company to adhere to all procedural guidelines and circulars issued by the NPCI.

In its filing to the Bombay Stock Exchange (BSE), Paytm outlined that the NPCI’s approval includes strict adherence to ongoing guidelines concerning risk management, brand guidelines for the app and QR codes, multi-bank guidelines, TPAP market share, and the handling of customer data. Furthermore, Paytm must comply with the requirements set out in a tri-partite agreement with NPCI and the Payment Service Provider (PSP) banks involved.

The NPCI’s letter, addressed to Vijay Shekhar Sharma, the founder and CEO of One97 Communications—Paytm's parent company—also emphasises the necessity of following various laws and regulatory guidelines. These include the Payments and Settlement Act 2007, the Information Technology Act 2000, the Digital Personal Data Protection Act 2023, and the 2018 circular on the storage of payment system data.

Previously, according to PTI, the RBI had directed Paytm Payments Bank to halt the acceptance of deposits and top-ups into customer accounts and wallets due to persistent non-compliance issues. This action had stemmed from serious supervisory concerns raised by the RBI.

In a separate financial update, One97 Communications reported a net profit of ₹928.3 crore for the quarter ending September 2024, a remarkable turnaround from a loss of ₹290.5 crore during the same period last year. This improvement was largely due to an exceptional gain from the sale of its entertainment ticketing business to Zomato. However, revenue from operations saw a significant decline, dropping by 34.1% year on year to ₹1,659.5 crore in the latest quarter.

The recent approval from the NPCI signifies a pivotal moment for Paytm as it navigates the regulatory landscape while striving to regain momentum in the digital payments space.

(With inputs from PTI) 

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