The National Payments Corporation of India has granted the Third-party application provider app to Paytm. All the @paytm handles will be acquired by Yes Banks instead of Paytm Payments Bank (PPBL).
The National Payment Corporation of India approved the licence for Paytm's parent company One97 Communications Ltd (OCL) as a third-party application provider. This means that the company can still function as a third-party payment app just like its rivals Google's Gpay and Walmart's PhonePe. The licence was granted on March 14, a day before the last deadline for Paytm Payments Bank (PPBL).
On January 31, the Reserve Bank of India (RBI) prohibited Paytm Payments Bank from allowing new deposits or any new credit transactions from February 29 onwards due to non-compliance and continued material supervisory concerns. Later the deadline was extended to March 15.
What is a third-party application provider licence?According to the licence provided by the NPCI to Paytm, it can partake in the Unified Payments Interface (UPI) as a third-party app. This means it has to rely on the network of banks for payments after its bank shuts down. This is also how Paytm's competitors Gpay and PhonePe function.
What does this licence mean for Paytm users?This licence will allow the Paytm app to function as a third-party UPI app. This means the users can make payments like they do on any other online payment app.
What is changing?After March 15, Paytm won't be able to use the licence for its affiliated Paytm Payments Bank. According to RBI, all the @paytm tags will be seamlessly transferred to other banks. According to reports, all the @paytm handles will be redirected to Yes Bank and it will acquire these handles.
The PPBL will still function and users will be able to withdraw and transfer money from their PPBL accounts but won't be allowed to deposit money in it. Customers can also not add money to the PPBl wallets but can utilise the current wallet balance to make payments. Users cannot recharge the PPBL-issued FASTags and are advised to get new ones from another bank.
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