Consider Paytm request to become third-party UPI service provider: RBI to NPCI

The RBI on Friday said additional steps have become necessary to ensure seamless digital payments by UPI customers using ‘@paytm’ handle operated by the bank as PPBL cannot accept further credit into its customer accounts and wallets after March 15. The central bank said having multiple payment app providers will minimise the risk of concentration in the UPI system.

“NPCI has been advised by the RBI to examine the request of One97 Communication Ltd (OCL) to become a Third-Party Application Provider (TPAP) for UPI channel for continued UPI operation of the Paytm app, as per the norms,” the banking regulator said in a release.

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

A TPAP participates in the UPI system through a payment service provider (PSP) bank. There are 22 entities — including Amazon Pay, Google Pay, Phone Pe, Whatsapp and TataNeu — that have a TPAP licence.

If NPCI grants the TPAP status to Paytm, the RBI said, ‘@paytm’ handles should be seamlessly migrated from PPBL to a set of newly identified banks.

“No new users are to be added by the said TPAP until all the existing users are migrated satisfactorily to a new handle,” the central bank said.

To ensure the seamless migration of ‘@paytm’ handle, NPCI should facilitate certification of four or five banks as PSP banks with demonstrated capabilities to process high volume UPI transactions, said the RBI.

According to the NPCI, large TPAPs can participate in UPI only through a multibank model.

For the merchants using Paytm QR Codes, the RBI said the company may open settlement accounts with one or more PSP banks (other than PPBL).

The regulator clarified that the migration of UPI handles is applicable only to customers and merchants who have the ‘@paytm’ UPI handle.

The RBI advised people, whose underlying account or wallet is currently with Paytm Payments Bank, to make arrangements with other banks well before March 15.

Last week, the RBI issued a detailed list of clarifications for PPBL customers. After March 15, wallet users of the bank will not be able to top-up or transfer money into the wallet or receive any credit, other than cashbacks, or refunds into the wallet.

The RBI said customers using FASTags issued by PPBL will not be able to top-up and recharge the balance after March 15, and will have to procure a new FASTag issued by another bank before the deadline.