• Paytm's parent company, One97 Communications, has received approval from the National Payments Corporation of India (NPCI) to onboard new users for its Unified Payments Interface (UPI) services.
• The approval was granted by NPCI Managing Director and CEO, Dilip Asbe, in a letter to OCL founder and CEO, Vijay Shekhar Sharma.
• The NPCI has stipulated that the permission is subject to OCL's adherence to procedural guidelines and requirements outlined in the tri-partite agreement with Payment Service Provider (PSP) banks.
• The recent approval to onboard new UPI users is expected to further strengthen Paytm's position in the digital payments market.

In a significant development for the digital payments landscape in India, One97 Communications (OCL), the parent company of Paytm, has received approval from the National Payments Corporation of India (NPCI) to onboard new users for its Unified Payments Interface (UPI) services. This decision, announced on October 23, 2024, comes after a request made by OCL on August 1, and is expected to provide a significant boost to Paytm's user base and overall market presence.

The approval was granted by NPCI Managing Director and CEO, Dilip Asbe, who communicated the decision in a letter to OCL founder and CEO, Vijay Shekhar Sharma. The letter stated, Upon examination of your request, we hereby accord our approval and permit One97 Communications Private Limited (OCL) to onboard new users on their UPI (Paytm) application.

However, the approval comes with certain conditions. The NPCI has stipulated that the permission is subject to OCL's adherence to procedural guidelines and requirements outlined in the tri-partite agreement with Payment Service Provider (PSP) banks.

NPCI's Conditions and Paytm's Previous Restrictions

This includes compliance with all laws and regulatory guidelines applicable and issued from time to time, including the Payments and Settlement Act 2007, Information Technology Act, 2000, Digital Personal Data Protection Act, 2023, and the circular on Storage of Payment System Data, 2018.

This development is particularly significant for Paytm, as the company had previously been barred from adding new UPI users on the Paytm app following directions issued by the Reserve Bank of India (RBI) on January 31 and February 16. The restrictions were imposed on Paytm's associate company, Paytm Payments Bank Limited (PPBL), which had a direct impact on Paytm's ability to onboard new UPI users.

In March, the NPCI had given approval to Paytm to participate in UPI as a Third-Party Application Provider (TPAP). This allowed the company to continue UPI transactions through four banks - SBI, Axis Bank, HDFC Bank, and YES Bank.

Paytm's Journey and Future Prospects

The recent approval to onboard new UPI users is expected to further strengthen Paytm's position in the digital payments market. The NPCI's letter also emphasized the need for adherence to guidelines and circulars issued specifically on risk management, brand guidelines for app and QR, multi-bank guidelines, TPAP market share, and customer data. This indicates the NPCI's commitment to ensuring a secure and robust digital payments ecosystem in the country.

Historically, the NPCI's approval for Paytm to onboard new UPI users marks a significant milestone in the company's journey. Paytm, which started as a mobile recharge platform, has evolved into one of India's leading digital payment platforms, offering a wide range of services including mobile recharges, utility bill payments, travel booking, and financial services.

The company's UPI service, launched in 2017, has been a key driver of its growth, with millions of users leveraging the platform for seamless and secure digital transactions. However, the journey has not been without challenges. The RBI's restrictions earlier this year had dealt a blow to the company's growth plans.

The recent approval from the NPCI, therefore, comes as a significant relief and opens up new opportunities for the company to expand its user base and deepen its market penetration. As the company navigates the regulatory landscape and continues to innovate, it will be interesting to watch how this development shapes the future trajectory of digital payments in India.