With approval from the NPCI, Paytm is now a third-party UPI app provider

One97 Communications Limited (OCL), the parent company of Paytm, has received clearance from the National Payments Corporation of India (NPCI) to function as a third-party application provider (TPAP) for Unified Payments Interface (UPI) services under the multi-bank model.

Especially after regulatory action caused Paytm’s banking subsidiary, Paytm Payment Bank Limited (PPBL), to halt operations after March 15, this long-awaited license is a critical lifeline for the company. Paytm may go on providing UPI services to its enormous user base with this clearance.

With approval from the NPCI, Paytm is now a third-party UPI app provider.
In order to enable UPI transactions, Paytm will work with four significant banks—Axis Bank, HDFC Bank, State Bank of India, and Yes Bank—as per the new agreement. These banks will function as middlemen between the Paytm app and the larger financial network, operating as Payment System Providers (PSPs). Interestingly, in the UPI environment, PSPs can only be banks.

In the past, Paytm made use of PPBL, a financial organization that had the TPAP license. But Paytm had to shift course due to regulatory changes, which included working with other banks to provide UPI services. This puts Paytm’s business model in line with that of its rivals, who run comparable operations including Google Pay, PhonePe, Cred, and Amazon Pay.

Yes Bank will be essential to Paytm’s current and prospective UPI merchants as the merchant acquiring bank. This strategic alliance emphasizes how crucial it is for the financial ecosystem to work together to maintain services for both users and merchants.

During the changeover, current Paytm customers and merchants should anticipate a smooth UPI transaction and AutoPay requirement process. To guarantee uninterrupted service, the @Paytm handle will now be routed to Yes Bank. The NPCI has emphasized how crucial it is to swiftly finish the migration procedures for current handles and mandates to the new PSP banks in order to provide a seamless transition for all parties.

Paytm’s revenue is mostly based on UPI transactions; in February, the platform handled 1.41 billion monthly transactions valued at Rs 1.65 lakh crore. Even though these statistics are somewhat lower than those from January, Paytm is still a major participant in India’s digital payment market. With UPI transactions accounting for almost 75% of the platform’s gross merchandise value (GMV), it is clear how dependent the platform is on them.

For Paytm, receiving NPCI clearance is a significant step forward as it navigates regulatory changes and solidifies its place in the digital payments industry. In an ever-changing regulatory landscape, Paytm exhibits its dedication to innovation and agility by adopting a collaborative strategy with top banks.

Paytm’s alliances with Axis Bank, HDFC Bank, State Bank of India, and Yes Bank pave the way for future improvements and service expansions for its consumers. By using these banking partners’ infrastructure and experience, the firm will be able to promote greater financial inclusion and innovation across India.

Paytm’s certification as a third-party UPI app provider highlights the rising relevance of cooperation between fintech businesses and conventional financial institutions, as digital payments continue to gather traction in the nation. In addition to guaranteeing regulatory compliance, this cooperative strategy promotes resilience and innovation in India’s digital economy.