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Business News/ Companies / News/  Paytm gets a third-party license from NPCI. What does this mean for you?
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Paytm gets a third-party license from NPCI. What does this mean for you?

So, what does this mean for customers? Paytm's users can now continue to access Unified Payments Interface or UPI function.

The NCPI on March 14 granted Paytm Payments Bank a third-party license, just a day ahead of the fintech platform's RBI-mandated closure of services (Mint)Premium
The NCPI on March 14 granted Paytm Payments Bank a third-party license, just a day ahead of the fintech platform's RBI-mandated closure of services (Mint)

The National Payments Council of India (NPCI) on March 14 granted troubled fintech Paytm a Third-Party Application Provider (TPAP) licence, just a day ahead of the closure of its Paytm Payments Bank (PPBL) arm.

The Reserve Bank of India (RBI) had directed PPBL to wind down services from March 15 after it was subjected to regulatory scrutiny due to non-compliance with KYC norms and other mandated processes.

The license is thus a big relief for Paytm, whose share price hit 5% upper circuit on March 15.

So, what does this mean for customers? While PPBL's wallet, deposits, credit transactions, and FASTag recharge services are halted from March 15 onwards, you can now use the Unified Payments Interface or UPI function.

Also Read | Paytm Payments Bank to close from March 15. Here's all that customers need to know

What Does Third-Party License Mean?

According to the NPCI release, four banks — Axis Bank, HDFC Bank, State Bank of India, and YES Bank, shall act as Payment System Provider (PSPs) banks to PPBL's parent company One97 Communications.

Thus users can link their bank accounts to Paytm (similar to what they do for apps like PhonePe, etc.) and continue to access the UPI function routed through the banks.

Further, the release said that YES Bank has been named as the acquiring bank for all @paytm handles. This means that all users with the "@paytm" accounts will see their UPI transactions being redirected to YES Bank.

Paytm has been directed to complete this migration for all existing handles "at the earliest", the release added.

Paytm recorded 1.41 billion monthly transactions worth 1.65 trillion in February this year, down from 1.57 billion transactions worth 1.93 trillion in January, data on the NPCI website showed. The app sees the majority (around 75 percent) of its gross merchandise value (GMV) drawn from in-app UPI transactions.

What about PPBL?

Earlier, PPBL held the TPAP licence, which meant that unlike its rivals, PhonePe, Google Pay and Cred, Paytm itself did not need a separate license for payment functions.

The RBI on February 24 said it instructed the NPCI to review One97 Communication's request for TPAP on the Paytm app.

PSPs need to obtain a TPAP license from NPCI to run UPI services and facilitate merchant transactions through partner banks, as per the current regulations. Twenty-two entities, including Amazon Pay, Google Pay, Mobikwik, PhonePe, and WhatsApp, currently have a TPAP licence.

In line with the RBI mandate, PPBL is to shut down services such as deposits, credit transactions, and FASTag recharges from today.

Here is what remains affected by the PPBL shutdown

Depositing Money: Customers will no longer be able to deposit money into their PPBL accounts from March 15 onwards. Similarly, salary credit, direct benefit transfers or subsidies via PPBL accounts will also be halted.

Money Withdrawal and Transfer: Customers will be allowed to keep withdrawing and transferring money from their PPBL accounts. Besides this, refunds, winnings and cashbacks from partner banks will be processed.

Wallets Functions: Customers will be unable to use top-up and transfer facilities for their PPBL wallets after March 15. They will be allowed to use existing money from the wallet for transactions and payments.

FASTag Recharge: Customers will not be able to recharge their PPBL-issued FASTags. Paytm FASTag users should procure a new one issued by another bank as soon as possible to ensure a seamless travel experience and avoid inconvenience at toll plazas, the National Highways Authority of India (NHAI) stated in an advisory.

NCMC Cards: Customers will also not be able to recharge or top-up funds into their National Common Mobility Cards (NCMC) issued by PPBL.

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Published: 15 Mar 2024, 10:11 AM IST
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