Shares of One 97 Communications Limited (Paytm) will be in focus on Monday morning as the fintech company announced a partnership with Axis Bank, in a bid to continue merchant settlements. The arrangement is made to seamlessly replace the nodal account that Paytm was using with Paytm Payments Bank. The announcement came as the RBI's much awaited FAQs (frequently asked questions) suggested Paytm QR, Card machine and Soundbox would continue to work beyond March 15.
Paytm said Paytm Payment Services Ltd (PPSL), the wholly owned subsidiary of Paytm, was already using the Axis Bank services, since its inception. "Both OCL and PPSL are also in discussions with other banks to evaluate a second partner for nodal / escrow services. Consumer payments for merchant transactions are typically collected in a dedicated account. This arrangement enables Paytm to seamlessly transition its merchants’ settlements," it said.
Morgan Stanley on Monday said while the RBI extended the timeline for the effective ban on banking/wallet related operations to March 15, there was no change made to timeline for nodal accounts of Paytm and Paytm Payments Services with Paytm Payments Bank. The foreign brokerage noted that the nodal accounts are to be terminated by February 29, with settlements can be completed by mid-March.
This brokerage has 'equalweight' rating on the stock with a target of Rs 555.
"RBI hinted at merchants being able to use Paytm QR code/Soundbox or POS terminal as long as it's linked to a non-PPBL bank account. This is a major positive though we would have liked to see more details such as: What merchants need to do to continue using these payment solutions, if any (e.g. a re-KYC). What Paytm needs to do to enable these payments and if it's permitted to do so? (e.g. Switch over Nodal accounts, Partner with another bank as PSP etc). The details were probably not provided as they deal with One 97 entity and potentially areas that NPCI governs but given these were supposed to be released in consultation with NPCI and NHAI, more details would have been helpful," Bernstein said.
Bernstein said it would also seek clarity on certain restrictions as the cut-off date has been extended to March 15 against February 29th. The foreign brokerage suggested an 'Outperform' on Paytm with a target of Rs 600.
"There was no explicit exception provided for a bulk transfer of wallets/Fastags to another bank and hence these products will cease to exist — this was a largely expected negative. However, transfer of balances to another wallet is permitted," Bernstein said.
The foreign brokerage said that the central bank's actions appear to be limited to Paytm Paytments Bank and not intended at disrupting the UPI payments and other functions of
Paytm. "We find this to be incrementally positive though still short on the finer details," it said.
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