Paytm Payment Services Has Been Granted An Extension By The RBI To Resubmit Its Payment Aggregator Licence Application.

The Reserve Bank of India (RBI) has awarded Paytm Payment Services Ltd. (PPSL) an extension to submit its application for a payment aggregator (PA) licence, according to a regulatory filing issued by One97 Communications, the parent company of PPSL, on March 26, 2023. According to the document, the central bank has also permitted PPSL to keep running as a payment aggregator while it waits for government clearance of previous investments it received from One97 Communications.

“According to RBI’s letter, PPSL will have 15 days after receiving GoI (Government of India) clearance to file the application seeking authorization for PPSL to function as an online PA. One97 Communications warned the stock exchanges that if the GoI made any unfavorable decisions, they must be promptly communicated to the RBI. Without adding any new merchants, it continued, “PPSL may continue with its online payment aggregation operation for current partners during this process.”

According to the firm, the most recent changes would not “materially” affect PPSL’s operations or earnings. It further stated that the RBI notification only applies to “onboarding of new online merchants” and that “we may continue to provide payment services to our current online merchants. It was made clear that One97 Communications can continue to sign up new merchants for offline business and provide them with payment services, including all-in-one QR, soundbox, card machines etc.

After receiving a licence from the payment regulation, online payment aggregators are those organisations who sign up digital merchants and accept payments from clients on their behalf. The RBI published circulars on “Guidelines on Regulation of Payment Aggregators and Payment Gateways” on March 17, 2020, and March 31, 2021.

India.com reported on February 16, 2023, that the central bank has returned the PA licence application for Paytm Payments Services Ltd along with three other applications. Furthermore rejected were the applications submitted by PayU Payments Private Limited, Free charge Payment Technologies Private Limited, and Tapits Technologies Private Limited. 

All UPI payments may be made with Paytm wallet balance.

Now, Paytm Wallet users don’t need to link their bank accounts in order to use their balances to make purchases from any UPI QR or online business that accepts UPI payments. After the publication of guidelines for wallet interoperability on March 24, this was done by the National Payments Corporation of India. When wallet users make purchases from businesses that have been acquired by other payment aggregators or banks, Paytm Payments Bank, which manages the digital wallet, will receive an interchange of 1.1%.

If a consumer chooses to add more than Rs 2000 using UPI, Paytm Payments Bank will charge them 15 basis points as fees, and they will also be paid 15 bps if any other wallets use the bank to add more than Rs 2000 using UPI. According to Paytm, there are 10 crore wallet users in the nation. Only wallets that are fully KYC compliant will have access to this facility.

Paytm Payments Bank is an associate of One97 Communications (OCL) which is the listed corporation that owns the Paytm brand. As Paytm wallet is now based on the reduced standardized interchange, “OCL will have a favorable impact in the form of considerably lower interchange costs paid to PPBL for Paytm wallet. Despite RBI’s announcement of wallet and UPI interoperability last year, the implementation was put off because it proved challenging for payment companies to pass on interchange fees from merchant transactions.

Paytm stock rises by 3%. Here’s what’s driving the stock

Shares of fintech firm Paytm rose nearly 3% to Rs 638 in intraday trade on the BSE on Tuesday after the company announced that its KYC wallet customers can now make payments on any UPI QR code and online merchant that accepts UPI payments.

Trade on the BSE, shares of fintech company Paytm increased by almost 3% to Rs 638 after the company announced that starting today, users of its KYC wallet will be able to make purchases at any UPI QR code or online retailer that accepts UPI payments.

Due to problems with interchange fees and zero merchant discount rates (MDR) for UPI, fintech companies had difficulty properly implementing the RBI’s regulation. One97 Communications, which holds a 49% stake in Paytm Payments Bank (PPBL), stated in a stock exchange filing on Monday that the payments bank will have a positive impact in the form of significantly lower interchange fees paid to PPBL for Paytm wallet because Paytm wallet is now based on the lower standardised interchange. 

The following was mentioned in a statement by Paytm,”Bank (PPBL) would earn 1.1% interchange income when its wallet consumers make payments on merchants acquired by other payment aggregators or banks.” PPBL will pay 15 basis points (bps) as expenses for adding more than Rs 2,000 using UPI, and the announcement states that it would also earn 15 bps whenever any other wallets use the bank to add more than Rs 2,000 through UPI. According to Paytm, there are 100 million wallet users in the nation.

In February, PPBL completed 1.02 billion UPI transactions, including on-us transfers when the issuing and receiving banks are the same. The stock has increased by more than 18% year to date. 

Edited by Prakriti Arora