Paytm Cleared by NPCI for Third-Party UPI Services

Reserve Bank of India Limits Paytm Payments Bank Operations, Sparking Market Reaction

The Reserve Bank of India barred Paytm Payments Bank from offering all its core services — including accounts and wallets — from March, effectively crippling the company’s business.
The action is technically not a cancellation of the licence of Paytm Payments Bank, but it constricts the company’s operations to a very large extent.However, the central bank has allowed the withdrawal or utilisation of balance amounts by customers “without any restrictions, up to their available balance.
After this news Paytm trembled approx more than 40%. Yesterday Paytm gained 10% after 1.4% equity changed hands in multiple block deals over the last day. FYI – reports say Vijay Shekhar Sharma also met the Finance Minister.

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%


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.

Disclaimer: This post has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.

Thanks for the information

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