NPCI to approve Paytm's TPAP licence

Wednesday 13 March 2024 15:17 CET | News

The National Payments Corp of India (NPCI) has planned to authorise a third-party application provider (TPAP) licence for Paytm, an India-based digital payments app. 

As per the information detailed by several sources to Reuters, NPCI is likely to approve a TPAP licence for Paytm, which is set to allow customers to leverage the app for payments through India’s Unified Payment Interface (UPI), even as its banking arm, Paytm Payments Bank, terminates its operations by 15 March 2024.

The National Payments Corp of India (NPCI) has planned to authorise a third-party application provider (TPAP) licence for Paytm, an India-based digital payments app.

Operated by the NPCI, UPI is India’s real-time payment system that enables users to transfer money across banks. According to one of the sources, the TPAP licence authorisation is set to come before 15 March 2024, as most of the checks have been completed. Additionally, while the integration with banks can take more than a month, the licence approval process should be instituted before the deadline ends. At the time of the announcement, NPCI did not respond to requests for comment to Reuters, while Paytm declined to comment on the matter.

Paytm’s TPAP licencing process

At the end of February 2024, the Reserve Bank of India (RBI) directed the NPCI to review a request from Paytm. At that time, the company asked to become a TPAP and, if accepted, the move was set to allow Paytm to continue processing payments via UPI, despite requiring a new set of banks to support the application. The RBI underlined that NPCI was tasked with facilitating four to five banks capable of managing high volumes of UPI payments to serve as service providers for Paytm. The company partnered with Axis Bank in February 2024, with plans to additionally collaborate with HDFC Bank, State Bank of India, and Yes Bank for processing transactions via UPI.

Considering data from the NPCI website indicating that Paytm ranks as the third largest app for UPI payments in the country, the company processes 1.41 billion monthly transactions, closely following PhonePe and Google Pay. The RBI suggested that the company might establish settlement accounts with one or more banks, to ensure the continual of operations for Paytm QR codes.

The approval of the TPAP licence is expected to allow Paytm’s transaction volumes to increase after a period of downfall mostly due to recent announcements about Paytm Payments Bank. One of the sources stated for Reuters that Paytm is regularly meeting with NPCI to obtain the TPAP licence. Furthermore, the central bank is unlikely to extend the 15 March 2024 deadline for the company’s banking arm to cease its operations, as per the details provided by the same sources.

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Keywords: banking license, online banking, banks, mobile banking, digital banking
Categories: Banking & Fintech
Companies: NPCI, Paytm
Countries: India
This article is part of category

Banking & Fintech




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