NPCI Greenlights Paytm To Initiate User Migration To PSP Bank Handles

The National Payments Corporation of India (NPCI) has granted One97 Communications (OCL), the operator of Paytm, permission to initiate the transfer of users to a new payment service provider (PSP) facilitated by banks. This development follows NPCI's approval for Paytm to function as a third-party application provider (TPAP) on the Unified Payments Interface (UPI) over a month ago. State Bank of India (SBI), Axis Bank, HDFC Bank and YES Bank will serve as PSPs for Paytm.

According to OCL's statement, all four banks are now operational on the TPAP, simplifying the process for migrating user accounts to these PSP banks. Users with the @Paytm UPI handle can now generate new virtual payment addresses (VPAs) with the partnered PSP banks. OCL has begun transitioning users with '@paytm' handles to these PSP banks, as Paytm operates as a TPAP under a multi-bank model.

Last month, NPCI advised Paytm to expedite the migration of all existing handles and mandates to new PSP banks. In February, the Reserve Bank of India (RBI) recommended NPCI to consider OCL's request to become a TPAP to ensure the continued UPI operation of the app.

A PSP bank, whether through its own application or a TPAP, facilitates the onboarding and registration of customers on UPI, linking their bank accounts to their respective UPI identifications. TPAPs, as per NPCI, are service providers participating in UPI through PSP banks. Currently, there are 24 operational TPAPs in India, including Amazon Pay, PhonePe and Google Pay.

Fintech companies are supported by multiple banks, such as Axis Bank, HDFC Bank, SBI and ICICI Bank, through the TPAP route. For example, customers transacting on UPI via PhonePe have VPAs issued through financial institutions like YES Bank, ICICI Bank and Axis Bank, with their UPI handles ending in @ybl, @ibl, or @axl, respectively.