Paytm Bank No More! What Lies Ahead For Customers?
Paytm’s chief executive officer (CEO), Vijay Shekhar Sharma, tweeted on Friday that Paytm app will be working even after 29 February. "To every Paytmer, Your favourite app is working, will keep working beyond 29 February as usual,” Sharma said on X.
Now, the most important question that arises in every Paytm customer’s mind is whether the app will be working the way it was working earlier or if there will be changes post 29 February 2024.
Paytm did an analyst's talk to answer some of the most significant questions regarding the operations of the Paytm app as well as what is going to be One97 communications (OCL) strategy post 29 February.
“Our services will continue to remain operational beyond 29 February. This is because most of the services offered by Paytm are in partnership with various banks, not just its associated bank. Paytm collaborates with multiple banks on various payment products and provides acquiring services to merchants in partnership with several leading banks in the country. The company will continue to expand its third-party bank partnerships,” said Bhavesh Gupta, president and chief operating officer (COO), Paytm.
The Reserve Bank of India (RBI), in the exercise of its powers under section 35A of the Banking Regulation Act, 1949, had directed Paytm Payments Bank (PPBL) to stop onboarding new customers with immediate effect. PPBL was the associate bank of Paytm. Some of the most prominent features like Paytm wallet, FASTags, National Common Mobility Card (NCMC), customer accounts, prepaid instruments etc. used to function under the ambit of Paytm Payments Bank.
"The directives issued by RBI are for Paytm Payments Bank and not Paytm. Paytm has been informed that these directives will not affect user deposits in their savings accounts, wallets, FASTags, and NCMC accounts. Users can continue to use their existing balances in these accounts without any disruption," said Madhur Deora, president and group chief financial officer (CFO), Paytm.
It's important to note that the central bank has declared the Nodal Accounts of One97 Communications and Paytm Payments Services are going to be terminated as soon as possible, but no later than 29 February 2024. In simpler terms, the account that acted as a vault for customer payments for Paytm Bank will be terminated on or before 29 February 2024. Nodal accounts are special internal accounts that intermediaries are required to maintain by the RBI and act as vaults, where customer payments are collected before they are transferred to the merchants.
Deora said, "PPSL will move the nodal to other banks during this period" in response to the direction to terminate the nodal account of One97 Communications and Paytm Payments Services by 29 February 2024.
The RBI has also stated in its directive that no other banking services like fund transfers including Aadhaar Enabled Payment System (AEPS), Immediate Payment Service (IMPS), Bharat Bill Payment Operating Unit (BBPOU) and unified payment interface (UPI) facility should be provided by the bank after 29 February 2024.
“Customers' investments with Paytm Money are safe. The company assured that the recent RBI directives on Paytm’s associate bank won't affect Paytm Money (PML) operations or customers' investments in Equity, Mutual Funds or National Pension Scheme. Paytm Money is Securities and Exchange Board of India (Sebi) regulated and fully compliant,” said Vijay Shekhar Sharma, CEO, Paytm.
The company has also stated that the Paytm Payment Gateway business (online merchants) will continue to offer payment solutions to its existing merchants. The company further mentioned that the Paytm’s offline merchant payment network offerings like Paytm QR, Paytm Soundbox and Paytm Card Machine will continue as usual, where it can onboard new offline merchants as well and the company offers acquiring services to merchants in partnership with several leading banks in the country and will continue to expand third-party bank partnerships.
“Paytm’s offline merchant payment network offerings like Paytm QR, Paytm Soundbox, Paytm Card Machine, will continue as usual, where it can onboard new offline merchants as well,” Paytm said in an exchange filing.
