In January 2024, the Reserve Bank of India (RBI) imposed restrictions on Paytm Payments Bank (PPBL) due to “persistent non-compliance” with regulations. PPBL needs to settle all existing transactions by March 15, 2024. This has led to an impact on Paytm’s UPI service as well. However, users need not worry as clear guidelines have come in around the use of Paytm UPI ID.
Third-Party App Provider (TPAP)
RBI has asked the NPCI to examine the possibility of migrating Paytm Payments Bank customers using the UPI handle ‘@paytm’ to 4-5 other banks, in a bid to prevent any disruptions in the payment ecosystem.
On Friday, the central bank came out with additional steps for the benefit of customers, wallet holders and merchants who are availing banking services from Paytm Payments Bank, which has been barred from accepting deposits and credits after March 15, 2024.
If approved by NPCI, Paytm users with “@paytm” UPI handles could potentially migrate seamlessly to newly identified banks, minimising disruption.
As per the website of Paytm Payments Bank (PPBL), it has 30 crore wallets and 3 crore bank customers.
NPCI, an umbrella organisation for operating retail payments and settlement systems in India, is an initiative of RBI and Indian Banks’ Association (IBA) for creating a payment and settlement infrastructure in India.
As the PPBL 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 bank, and minimise concentration risk in the UPI system by having multiple payment app providers, the RBI said in a statement.
“NPCI has been advised by the RBI to examine the request of One97 Communication Ltd (OCL) to become a Third-Party Application Provider (TPAP) for UPI channel for continued UPI operation of the Paytm app, as per the norms,” it said.
One97 Communications Ltd (OCL), which owns the Paytm brand, holds a 49 per cent stake in PPBL.
RBI further said that in the event of NPCI granting TPAP status to OCL, it may be stipulated that ‘@paytm’ handles are to be migrated seamlessly from PPBL to a set of newly identified banks to avoid any disruption.
“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. This is in line with NPCI norms for minimising concentration risk,” RBI said.
Also, for the merchants using PayTM QR Codes, OCL may open the settlement accounts with one or more PSP Banks (other than Paytm Payments Bank), the Reserve Bank said.
It further said 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.
RBI again asked the customers, whose underlying account/ wallet is currently with Paytm Payments Bank, to make an alternative arrangement with other banks well before March 15, 2024.
It further said that the holders of FASTag and National Common Mobility Cards (NCMC) issued by Paytm Payments Bank, may make alternative arrangements before March 15, 2024, to avoid any inconvenience.
“All the … actions are undertaken in the sole interest of protecting the customers and payment system from any possible disruptions and are without any prejudice to the regulatory or supervisory actions initiated by RBI against Paytm Payments Bank,” the central bank said.
In March 2022, the RBI barred PPBL from onboarding new customers with immediate effect.
Paytm UPI Use After March 15
No, you will not be able to use @Paytm UPI after March 15, 2024, if your UPI handle is linked to Paytm Payments Bank. This is due to restrictions imposed by RBI on Paytm Payments Bank’s ability to handle UPI transactions.
Here’s a summary of what will and won’t work after March 15th:
What won’t work:
- Using @Paytm UPI: You won’t be able to initiate or receive UPI payments using your @Paytm UPI handle.
- Adding money to your Paytm wallet: Deposits and credit transactions to your Paytm wallet will be disabled.
What will still work:
- Existing wallet balance: You can still use your existing wallet balance for transactions until it’s depleted.
- Withdrawing money: You can withdraw money from your Paytm wallet to your linked bank account.
- Using Paytm app for other services: You can still use the Paytm app for other services like checking balance, bill payments, etc.
What to do:
If you currently use @Paytm UPI, it’s recommended to:
- Switch to UPI linked to another bank account: Link your UPI handle to a different bank account before March 15th to avoid any disruption in your UPI transactions.
- Update linked accounts for automatic payments: Update any recurring payments or subscriptions currently linked to your Paytm UPI with the new UPI handle associated with your other bank account.
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