The National Payments Corporation of India (NPCI) has given the green light to One97 Communications (OCL), the entity behind Paytm, to commence the migration of its users to a new payment service provider (PSP) handled by banks. This development comes after over a month since NPCI permitted Paytm to operate as a third-party application provider (TPAP) on the Unified Payments Interface (UPI). Acting as PSPs for Paytm are four major banks: State Bank of India (SBI), Axis Bank, HDFC Bank, and YES Bank.
OCL announced in a press release that all four banks are now active on the TPAP, simplifying the process for Paytm to transition user accounts to these PSP banks. Users with the @Paytm UPI handle can now generate new virtual payment addresses (VPAs) with partner PSP banks.
The transition of ‘@paytm’ handle users to the four PSP banks has already commenced, as Paytm operates as a TPAP under a multi-bank model. Last month, NPCI advised Paytm to expedite the migration of all existing handles and mandates to the new PSP banks.
In February of this year, the Reserve Bank of India (RBI) urged NPCI to consider OCL’s request to become a TPAP for the continued UPI operation of the Paytm app.
A PSP bank, either through its own application or a TPAP, is responsible for onboarding and registering customers on UPI, linking their bank accounts to their respective UPI identifications. According to NPCI, a TPAP is a service provider that engages in UPI through a PSP bank, managing the UPI ecosystem in India.
Currently, there are 24 operational TPAPs in the country, including major players like Amazon Pay, PhonePe, and Google Pay. Various banks, such as Axis Bank, HDFC Bank, SBI, and ICICI Bank, support fintech companies through the TPAP route.
For instance, customers utilizing PhonePe for UPI transactions have their VPAs issued through financial institutions like YES Bank, ICICI Bank, and Axis Bank, with their UPI handles ending in @ybl, @ibl, or @axl, respectively.
In terms of volume and value of UPI transactions processed, the Paytm Payments Bank app ranks as the third largest company, trailing behind PhonePe and Google Pay.
