RBI Initiates Measures For Seamless Digital Payments As Paytm Faces Deadline
The Reserve Bank of India (RBI) has taken proactive steps following the announcement that Paytm Payments Bank will cease to accept further credits into customer accounts and wallets after 15 March 2024. The RBI's move comes as a response to ensure the continuity of digital transactions for users of the popular payment platform.
Under the directives of the RBI, the National Payments Corporation of India (NPCI) has been tasked with evaluating a request from One97 Communication Ltd (OCL), parent company of Paytm, to become a Third-Party Application Provider (TPAP) for the Unified Payments Interface (UPI) channel. This step is crucial to sustain UPI operations within the Paytm app beyond the impending deadline.
Should NPCI grant TPAP status to OCL, Paytm users with @paytm UPI handles will undergo a seamless migration of their accounts from Paytm Payments Bank to a selection of newly identified banks. This measure aims to avert any disruption in service for customers relying on Paytm's digital payment infrastructure.
"National Payments Corporation of India (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," said RBI.
In anticipation of the transition, Paytm is gearing up to issue new Virtual Payment Addresses (VPAs) to its customers through multiple banks. HDFC Bank, Axis Bank and Yes Bank are among the institutions being considered to handle consumer-facing UPI payments, while also supporting the nodal accounts of Paytm's merchants.
Merchants utilising Paytm QR codes will see their settlement accounts being established with one or more Payment Service Provider (PSP) banks, distinct from Paytm Payments Bank.
Recognising the need to minimise concentration risk, the RBI has stressed the certification of 4-5 banks as Payment Service Provider (PSP) banks, capable of handling high-volume UPI transactions.
In light of these developments, the RBI has advised customers with underlying accounts or wallets with Paytm Payments Bank, as well as holders of FASTag and National Common Mobility Cards (NCMC) issued by Paytm Payments Bank, to make alternative arrangements well in advance of the 15 March deadline.
"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," said RBI in a statement.
