NPCI advised to help '@Paytm' UPI handle users migrate to other banks

Mumbai: The Reserve Bank has asked the National Payments Corporation of India (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. 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 in a seamless manner 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.