Paytm Users Can Keep Their UPI Handles After Migration to Other Banks: RBI Clarifies

In a recent development, the Reserve Bank of India (RBI) has instructed the National Payments Corporation of India (NPCI) to assess One97 Communication Ltd's (OCL) request to become a Third-Party Application Provider (TPAP) for the UPI channel, aiming to ensure the uninterrupted functioning of the Paytm app.

RBI's Directive to NPCI: A Closer Look

According to RBI's official statement, "National Payments Corporation of India (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 the UPI channel for continued UPI operation of the Paytm app, as per the norms."

The central bank emphasized that if NPCI grants TPAP status to OCL, a seamless migration of Paytm handles should occur from Paytm Payments Bank to a set of newly identified banks. The objective is to prevent any disruptions, and the directive specifies that no new users should be added by TPAP until all existing users are satisfactorily migrated to a new handle.

Seamless Migration and Reduced Concentration Risk:

• If NPCI grants OCL the TPAP status, the RBI suggests migrating existing "@"paytm" UPI handles seamlessly to a set of newly identified banks. This aims to minimize disruption for users.

• Additionally, the RBI advises NPCI to certify 4-5 Payment Service Provider (PSP) Banks capable of handling high-volume UPI transactions. This step aims to reduce concentration risk within the system.

Merchants and Other Users:

• Merchants using Paytm QR codes can continue doing so, as One97 Communication Ltd can open settlement accounts with other PSP banks besides PPB.

• The migration process only applies to users and merchants specifically with "@"paytm" UPI handles. Individuals with different UPI addresses or handles are not affected.

Ensuring Certification for PSP Banks

RBI has also advised NPCI to facilitate the certification of 4-5 banks as Payment Service Provider (PSP) Banks with demonstrated capabilities to process high volumes of UPI transactions. This certification aims at ensuring the smooth migration of Paytm handles to other banks, aligning with NPCI norms to minimize concentration risk.

The central bank stated, "This is in line with NPCI norms for minimizing concentration risk." As part of this process, merchants using PayTM QR codes may open settlement accounts with one or more PSP Banks, excluding Paytm Payments Bank.

Important Considerations for Paytm Users

RBI clarified that the migration of UPI handles applies only to customers and merchants with a UPI handle labeled 'Paytm.' Users with UPI addresses or handles different from 'Paytm' are not required to take any action.

Additionally, customers whose underlying accounts/wallets are currently with Paytm Payments Bank are advised to make alternative arrangements with other banks well before March 15, 2024, as previously communicated.

Attention to FASTag and NCMC Holders

Holders of FASTag and National Common Mobility Cards (NCMC) issued by Paytm Payments Bank are urged to make alternative arrangements before March 15, 2024, to avoid any inconvenience.

NPCI: A Crucial Player in India's Payment Landscape

The National Payments Corporation of India (NPCI), established under the provisions of the Payment and Settlement Systems Act, 2007, plays a pivotal role in operating retail payments and settlement systems in India. A joint initiative of RBI and the Indian Banks' Association (IBA), NPCI focuses on creating a robust payment and settlement infrastructure in the country.