India’s Paytm secures third-party app license ahead of curbing bank unit

National Payments Corporation of India, the firm that built the UPI rail of the same name in the country, approved Paytm’s application to participate in the payments ecosystem as a third-party application provider, giving the financial services firm Much needed relief that provides greater service. 300 million users and over 10 million merchants in the South Asian market.

The third-party application provider license will enable Paytm to offer payments through the UPI network, while Payments Bank, the banking arm of Paytm’s parent company One97 Communications, is scheduled to cease operations on Friday. The Reserve Bank of India in late January ordered Paytm to shut down operations at Paytm Payments Bank, an affiliate of the financial services firm that processed most of its transactions.

The move caused shock waves in the industry, and also meant that Paytm needed to secure third-party application provider licenses to continue operating many of the Paytm apps.

NPCI on Thursday said Axis, HDFC, State Bank of India and Yes Bank will serve as payment system providers for the Paytm app.

“Yes Bank will also act as the merchant acquisition bank for existing and new UPI merchants for OCL. The ‘@Paytm’ handle will be redirected to Yes Bank, NPCI said in a statement.

“This will enable existing users and merchants to continue carrying out UPI transactions and autopay mandates in a seamless and seamless manner. OCL has been advised to transfer all existing handles and mandates to the new PSP banks as soon as possible, wherever necessary.”

This is a developing story. Check back for updates.