Paytm, an Indian digital payments colossus that is operated by One 97 Communications, has been granted a coveted third-party application provider license by India's payments authorities. This is a big milestone that has occurred. This significant achievement comes at a time when there are growing concerns regarding the possibility of Paytm's banking division being shut down due to regulatory non-compliance, which raises issues about the sustainability of the company's services.
Paytm is now able to sustain smooth payments for its enormous user base through India's Unified Payment Interface (UPI) thanks to the newly obtained license. This will ensure that users will continue to have access to critical financial services even after the anticipated termination of Paytm's banking operations.
The National Payments Corporation of India (NPCI) has confirmed that Paytm has recognized a number of prominent financial institutions, including Axis Bank, HDFC Bank, State Bank of India, and Yes Bank, as payment system provider banks. This designation was made in accordance with the rules of this arrangement. And in addition to that, Yes Bank will take on the additional responsibility of acting as a merchant acquiring bank for both new and existing UPI merchants that are linked with Paytm.
Paytm has been given orders by the National Payments Corporation of India (NPCI) to speed up the process of migrating all of its existing handles and mandates to the banks that have been appointed as payment system providers. The company's goal is to provide a seamless transition for its enormous user base.
Paytm has emerged as a significant player despite recent regulatory obstacles, which highlights the growing significance of UPI as India's preferred real-time payments system. This development highlights the fact that UPI is becoming increasingly important.
Paytm continues to hold the position of the third-largest app for UPI payments in the country, despite the fact that the volume and value of transactions have decreased somewhat from January to February from the previous month. Particularly noteworthy is the fact that Paytm handled an astounding 1.41 billion transactions in the month of February alone, with a total value of 1.65 trillion rupees. However, when compared to the metrics for January, which were 1.57 billion transactions worth 1.93 trillion rupees, these data show a drop. Both PhonePe and Google Pay continue to be the most popular payment apps in India, and they continue to dominate the UPI payments environment.
Obtaining the authorization to operate as a third-party application provider has been a challenging endeavor due to the intense scrutiny from regulatory authorities. Just one month ago, the Reserve Bank of India (RBI) issued a directive to the National Payments Corporation of India (NPCI) to conduct a thorough evaluation of Paytm's request for this essential license. This action exemplifies the stringent regulatory environment that governs India's rapidly growing fintech industry.