RBI moves to ensure continuity of UPI transactions on Paytm

The NPCI should facilitate four to five banks, with an ability to process high volumes of UPI payments, to act as service providers to Paytm, the RBI said of Friday.

New Delhi: In a major relief to customers using Paytm UPI handle (@paytm), the Reserve Bank of India (RBI) on Friday asked the National Payments Corporation of India (NPCI) to examine the possibility of migrating the users from Paytm Payments Bank to 4-5 other banks.

The RBI has already directed Paytm Payments Bank to stop accepting deposits and credits after March 15, 2024. The central bank’s new directive seems to be aimed at preventing any disruptions in the payment ecosystem.

Paytm claims to have around 30 crore wallet users. The RBI’s clampdown on its payments bank arm has led to uncertainties and hit the company’s business and user base badly. Share price of One97 Communication Ltd (OCL), which owns the Paytm brand, has crashed by over 50% since the RBI’s order against Paytm Payments Bank announced on January 31.

In a new directive, the RBI noted that as the Paytm Payments Bank cannot accept further credits into its customer accounts and wallets after March 15, 2024, certain additional steps have become necessary to ensure seamless digital payments by UPI customers using ‘@paytm’ handle operated by the Paytm Payments Bank, and minimise concentration risk in the UPI system by having multiple payment app providers.

The RBI advised the government-run NPCI to examine the request of One97 Communication Ltd to become a third-party application provider (TRAP) for UPI channel for continued UPI operation of the Paytm app.

“It has been further advised that in the event of NPCI granting TPAP status to OCL, it may be stipulated that ‘@paytm’ handles are to be migrated in a seamless manner from Paytm Payments Bank to a set of newly identified banks to avoid any disruption,” the RBI said.

No new users are to be added by the said TPAP until all the existing users are migrated satisfactorily to a new handle, it added.

For seamless migration of ‘@paytm’ handle to other banks, NPCI may facilitate certification of 4-5 banks as Payment Service Provider (PSP) banks with demonstrated capabilities to process high volume UPI transactions, the central bank said.

For the merchants using Paytm QR codes, the RBI said One97 Communication Ltd may open the settlement accounts with one or more payment service provider banks (other than Paytm Payments Bank).

The RBI further clarified that the migration of UPI handles is applicable only to such customers and merchants who have a UPI handle ‘@Paytm’. For others who have a UPI address or handle other than ‘@Paytm’, no action is required to be taken by them.

The RBI advised the users of FASTag and National Common Mobility Cards (NCMC) issued by Paytm Payments Bank to “make alternative arrangements before March 15, 2024 to avoid any inconvenience.”