Paytm gets NPCI nod to become a third-party UPI app

The National Payments Corporation of India (NPCI) has granted approval to One97 Communications Limited (OCL), Paytm's parent entity, to participate in UPI services as a Third-Party Application Provider (TPAP) under multi-bank model.

The much-awaited license would allow Paytm to continue offering Unified Payments Interface (UPI) services to its app users, after its banking unit Paytm Payment bank Limited (PPBL) ceases operations post March 15 following regulatory action.

Under the new model, Paytm will now provide the payment service in partnership with four new banks--Axis Bank, HDFC Bank, State Bank of India, Yes Bank--who will act as its Payment System Provider (PSP). Previously, the fintech was powering this service via PPBL, which held the TPAP license. Since Paytm had a bank of its own, it did not need to be a separate TPAP license, unlike its rival apps such as Google Pay, PhonePe, Cred and Amazon Pay. Further, Yes Bank will act as the merchant acquiring bank for Paytm's existing and new UPI merchants. A PSP is a bank that helps the UPI app to connect with the banking channel. Only banks can act as PSPs. Moneycontrol had reported that the NPCI, which runs UPI payments, is working with all the banks to expedite the TPAP process by March 15.

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