NPCI allows Paytm to become third-party application on UPI with four banks

The National Payments Corporation of India (NPCI) on Thursday permitted Paytm parent One 97 Communications to operate as a third-party application provider on the Unified Payments Interface infrastructure.

The permission will allow Paytm to offer UPI payment services through a multi-bank model, like rivals PhonePe and Google Pay, moving away from its exclusive partnership with associate entity Paytm Payments Bank Ltd. Paytm Payments Bank, in which One 97 Communications owns a 49% stake, has to stop providing banking services from March 15 (Friday) as per a Reserve Bank of India order.

Axis Bank, HDFC Bank, State Bank of India and Yes Bank will act as payment system providers to One 97 Communications, said NPCI, which operates UPI.


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Yes Bank will also be the merchant acquiring bank for existing and new UPI merchants for the company.

The “@Paytm” handle, which Paytm has been using to provide the service through the payments bank, will redirect transactions to Yes Bank. This will enable existing users and merchants to continue to do UPI transactions and autopay mandates without interruptions. One 97 Communications has also been advised to complete migration for all existing handles and mandates, wherever required, to new PSP banks at the earliest, NPCI said.

On March 13, ET reported the names of the four banks that will support consumer UPI payments on the Paytm platform.

With the migration, the Noida-headquartered payments and financial services distributor will have to issue fresh UPI handles to its customers.

"Thank you NPCI, committed to grow UPI to new heights together," Paytm founder Vijay Shekhar Sharma wrote on microblogging platform X on Thursday.


On February 17, Paytm shifted its nodal accounts, or escrow accounts, to private-sector lender Axis Bank, to ensure merchant payments on its platform remain unaffected.

The RBI had asked Paytm to close all its nodal accounts with Paytm Payments Bank by February 29.

On March 1, Paytm said it had “mutually agreed” with the payments bank to discontinue various inter-company agreements to reduce dependencies.

According to data from NPCI, the Paytm app initiated 1.3 billion UPI payments in February and settled around Rs 1.5 lakh crore through the platform.