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The National Payments Corporation of India (NPCI) has allowed One97 Communications (OCL), the company that operates Paytm, to start migration of users to a new payment service provider (PSP) the bank handles.
This comes over a month after the NPCI allowed Paytm to function as a third-party application provider (TPAP) on the Unified Payments Interface (UPI).
Four banks — State Bank of India (SBI), Axis Bank, HDFC Bank, and YES Bank — will act as PSPs to Paytm.
“All four banks are now operational on the TPAP, streamlining the process for Paytm to shift user accounts to these PSP banks,” OCL said in a release.
UPI users with the @Paytm UPI handle can now create new virtual payment addresses or VPAs with partner PSP banks.
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OCL added it had started to transition ‘@paytm’ handles users to the four PSP banks. Paytm operates as a TPAP under a multi-bank model.
Last month, the NPCI had advised Paytm to complete the migration of all existing handles and mandates to new PSP banks “at the earliest”.
In February this year, the Reserve Bank of India (RBI) had advised NPCI to consider the request of OCL to become a TPAP for continued UPI operation of the app.
A PSP bank, either through its own application or a TPAP, onboards and registers customers on UPI. It links customers’ bank accounts to their respective UPI identifications.
A TPAP is a service provider that participates in UPI through a PSP bank, according to the NPCI, which runs the UPI ecosystem in India.
There are 24 TPAPs operational in the country, including Amazon Pay, PhonePe, and Google Pay.
Multiple banks, such as Axis Bank, HDFC Bank, SBI, and ICICI Bank, support fintech companies via the TPAP route.
For instance, customers using PhonePe to transact on UPI have their VPAs issued through financial institutions such as YES Bank, ICICI Bank, and Axis Bank. Their UPI handles end in @ybl, @ibl, or @axl, respectively.
Paytm Payments Bank app is the third largest company after PhonePe and Google Pay when it comes to processing UPI transactions in terms of volume and value.
