Paytm Cleared by NPCI for Third-Party UPI Services
Highlighting Paytm’s transition in UPI services, about the company’s approval to continue offering UPI services through a multi-bank model, ensuring seamless transactions for users and merchants.
The National Payments Corporation of India (NPCI) has granted approval to One97 Communications Limited (OCL), the parent company of Paytm, to continue offering Unified Payments Interface (UPI) services as a Third-Party Application Provider (TPAP) under the multi-bank model. This move comes as Paytm Payment Bank Limited (PPBL) faces regulatory action and ceases operations post-March 15.
The Transition
Previously, Paytm powered its UPI services through PPBL, which held the TPAP license. However, with the banking unit closing, Paytm will now partner with four new banks–Axis Bank, HDFC Bank, State Bank of India, and Yes Bank–to provide UPI services. These banks will act as its Payment System Providers (PSPs), facilitating the connection between the UPI app and the banking channel.
What It Means for Users
Existing Paytm users and merchants can continue to use UPI services seamlessly, as the @Paytm handle will be redirected to Yes Bank. Yes Bank will also serve as the merchant acquiring bank for Paytm’s UPI merchants. NPCI has advised Paytm to complete the migration of all existing handles and mandates to the new PSP banks promptly.
Impact on Paytm
As the third-largest UPI app in India, Paytm processed 1.41 billion monthly transactions worth Rs 1.65 lakh crore in February. However, this was a decrease from the 1.57 billion transactions valued at Rs 1.93 trillion in January. Despite this decline, the majority of Paytm’s transactions and around 75 percent of the gross merchandise value (GMV) are from customers using UPI for transactions on its app.
Financial Performance
In its regulatory filing for the December quarter results of fiscal 2023-24 (Q3FY24), Paytm reported a 38% rise in revenue to Rs 2,850.5 crore, up from Rs 2,062.2 crore in the year-ago period. The company also noted a narrowing of its consolidated net loss to Rs 221 crore from Rs 392 crore in the previous financial year. Despite these improvements, Paytm has not posted a net profit since its IPO in November 2021. Additionally, Paytm reported a consistent 13% increase in revenue each quarter, accompanied by a 23% reduction in losses.
The stock on the National Stock Exchange (NSE) is trading at its upper circuit, currently priced at Rs 370.70, showing a gain of 5.00%
Conclusion
The approval from NPCI marks a new chapter for Paytm’s UPI services, ensuring uninterrupted service for its users and merchants. With a new partnership with multiple banks, Paytm is set to continue its significant role in India’s digital payments ecosystem.
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