Paytm app: RBI asks NPCI to look into One97 Communication's plea to become TPAP for UPI usage 

The Reserve Bank of India on Friday said it has advised the National Payments Corporation of India (NPCI) to examine the request of One97 Communications Ltd (OCL), the parent of Paytm, to become a Third-Party Application Provider (TPAP) for UPI channel for continued UPI operation of the Paytm app, as per the norms. Unified Payments Interface is an instant real-time payment system developed by NPCI to facilitate inter-bank transactions through mobile phones.

It said that in case, NPCI grants TPAP status to OCL, it may be stipulated that ‘@paytm’ handles are to be migrated in a seamless manner.

"In the event of NPCI granting TPAP status to OCL, it may be stipulated that ‘@paytm’ handles are to be migrated in a seamless manner from Paytm Payments Bank to a set of newly identified banks to avoid any disruption. No new users are to be added by the said TPAP until all the existing users are migrated satisfactorily to a new handle," the RBI said in a notification on Friday.

A TPAP license will ensure that Paytm users can continue to make digital payments via the Unified Payments Interface (UPI). NPCI is entrusted with the supervision with the regulation and the supervision of UPI and related financial services that work on the network. PSPs need to obtain a TPAP license from NPCI to run UPI services and facilitate merchant transactions through partner banks.

Paytm is presently not classified as a TPAP due to UPI transactions being routed through Paytm Payments Bank.

On the other hand, 22 entities, including Amazon Pay, Google Pay, Mobikwik, PhonePe, and WhatsApp, currently have a TPAP licence.

The cenytra bank further added for seamless migration of ‘@paytm’ handle to other banks, NPCI may facilitate certification of 4-5 banks as Payment Service Provider (PSP) Banks.

"For seamless migration of ‘@paytm’ handle to other banks, NPCI may facilitate certification of 4-5 banks as Payment Service Provider (PSP) Banks with demonstrated capabilities to process high volume UPI transactions. This is in line with NPCI norms for minimising concentration risk1. For the merchants using PayTM QR Codes, OCL may open the settlement accounts with one or more PSP Banks (other than Paytm Payments Bank)," the bank said.

The RBI on Friday reiterated that customers with accounts and wallets with Paytm Payments Bank should make alternative arrangements before March 15, 2024.

The central bank further said:

1. The migration of UPI handles as above is applicable only to such customers and merchants who have a UPI handle ‘@Paytm’. For others who have a UPI address or handle other than ‘@Paytm’, no action is required to be taken by them.

2. Similarly, the customers, whose underlying account/ wallet is currently with Paytm Payments Bank, are advised to make alternative arrangement with other banks well before March 15, 2024, as already advised in the FAQs released.

3. It is reiterated that the holders of FASTag and National Common Mobility Cards (NCMC) issued by Paytm Payments Bank, may make alternative arrangements before March 15, 2024, to avoid any inconvenience.

4. All the above actions are undertaken in the sole interest of protecting the customers and payment system from any possible disruptions and are without any prejudice to the regulatory or supervisory actions initiated by RBI against Paytm Payments Bank.