NPCI gives in-principal approval to Paytm to onboard new UPI users

One97 Communications (OCL), the parent company of Paytm, has received a nod from the National Payments Corporation of India (NPCI) to on-board new UPI users, nearly nine months after the Reserve Bank of India (RBI) placed an embargo on addition of new customers. The permissions are subject to NPCI’s procedural guidelines and agreements with Payment Service Provider (PSP) banks.

“We would like to inform you that vide letter dated October 22, 2024, the National Payments Corporation of India (NPCI) has approved the Company to on-board new UPI users, with adherence to all NPCI procedural guidelines and circulars,” Paytm said in an exchange filing late Tuesday. 

This approval for new users may lead to an increase in UPI transaction volumes for the company. The NPCI approval comes after a significant loss of UPI market share for the fintech major, whose associate entity Paytm Payments Bank faced crippling restrictions from the banking regulator in January. 

The Fintech company’s market share on UPI has slipped from 13 percent in January to about 7 percent in September on the back of an embargo to add new users. 

In February, the RBI advised the NPCI to consider Paytm’s request to become a Third-Party Application Provider (TPAP) for continued UPI operation of the app. This was subject to the condition that no new users would be added by Paytm until all existing users were successfully migrated to a new handle.

In March, the company was allowed to function as a third party application provider (TPAP) on Unified Payments Interface (UPI). Four banks, State Bank of India (SBI), Axis Bank, HDFC Bank, and YES Bank, act as payment service providers (PSPs) to Paytm as part of the arrangement.