Paytm Starts Moving Users To New UPI Handles
The Paytm operator, One97 Communications Limited (OCL), started moving its users to partner payment service provider (PSP) banks on April 17. These banks include Axis Bank, HDFC Bank, SBI, and Yes Bank.
Every Paytm UPI user will now be prompted to provide permission to use Paytm with a new UPI ID linked to one of the following four handles: @ptsbi, @pthdfc, @ptaxis, or @ptyes.
All Paytm users who have @paytm handles will eventually get requests to switch to a new UPI handle with their permission.
Up till now, Paytm UPI users’ PSP bank has been Paytm Payments Bank Limited (PPBL), an OCL subsidiary. However, as the RBI imposed harsh penalties on PPBL, this agreement could no longer be maintained.
A PSP facilitates the link between the banking channel and the UPI app by acting as a middleman. The only institutions authorized to act as PSPs are banks.
The National Payments Corporation of India (NPCI) granted OCL permission to use the multi-bank model’s TPAP status for UPI services on March 14. The long-awaited license allows Paytm to continue offering its app customers UPI services after its banking business, PPBL, ceased operations on March 15 due to regulatory action.
“Paytm has accelerated the integration with Axis Bank, HDFC Bank, State Bank of India (SBI), and YES Bank subsequent to NPCI’s clearance on March 14, 2024, to onboard OCL as a Third-Party Application Provider (TPAP). The procedure for Paytm to move user accounts to these PSP banks has been streamlined since all four banks are now active on the TPAP, the firm said in a statement to stock markets.
A Hit to Market Share
The NPCI website reports that in March, Paytm’s UPI market share dropped to 9%, which is the lowest it has been in the previous four years. UPI activities are managed by NPCI.
It dropped to 11% in February from the previous month as a result of the RBI’s tight regulations on its affiliated business, PPBL.
RBI’s PBBL Action
In February 2024, the Reserve Bank of India (RBI) imposed stringent measures on PPBL as a result of “persistent non-compliances” noted in an audit report.
By March 15, 2024, the bank is expected to have settled all outstanding transactions and cleared its nodal accounts.
As of March 1, 2024, PPBL was not allowed to perform credit transactions or take any new deposits. Wallet transactions were restricted as part of this.
By taking these steps, PPBL essentially stopped its ability to operate as a payments bank.
