NPCI grants approval to Paytm to become third-party UPI service provider

Days after a request from the Reserve Bank of India (RBI), the National Payment Council of India (NPCI) Thursday granted approval to Paytm to participate in UPI as a third-party application provider (TPAP).

YES Bank will act as the merchant-acquiring bank for existing and new UPI merchants for the handle ‘@Paytm’, NPCI said in a statement.

The statement added that four banks  Axis Bank, HDFC Bank, SBI and YES Bank will act as the payment system provider to Paytm.

The Reserve Bank had in February asked NPCI to look into a request by One97 Communication Ltd, Paytm’s parent company, to become a third-party application provider  which would ensure that Paytm can continue to process payments through the unified payments interface (UPI).

On January 31, the regulator had told Paytm Payments Bank Ltd (PPBL), an associate of Paytm, to halt most of its operations by March 15, citing persistent non-compliance and supervisory concerns.

The move affected the operations of the Paytm app which used the bank for its nodal account.

Paytm later shifted its nodal account to Axis bank.

NPCI, the umbrella organisation for operating retail payments and settlement systems in India, owns and operates the UPI platform.