The National Payments Corporation of India (NPCI) on Thursday allowed One97 Communications (OCL), which operates brand Paytm, 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  — will act as payment service providers (PSPs) to Paytm.

The approval comes a day before the Reserve Bank of India’s (RBI’s) restrictions on Paytm Payments Bank kick in. The decision implies that Paytm’s users can continue to transact using UPI on the app.  

Paytm will operate as a TPAP under a multi-bank model, NPCI said. “@Paytm” handle shall be redirected to YES Bank. This will enable existing users and merchants to continue to do UPI transactions and AutoPay mandates in a seamless and uninterrupted manner,” the NPCI said in a press release. 


The NPCI said YES Bank would operate as a merchant acquiring bank for existing and new UPI merchants for OCL. Currently, @paytm is a virtual payment address (VPA) for the company’s users. It is a unique identifier that customers use to send and receive money on UPI.

Meanwhile, the NPCI has advised Paytm to complete the migration of all existing handles and mandates to new PSP banks “at the earliest”.   

Last month, the RBI had advised NPCI to consider the request of OCL to become a TPAP for continued UPI operation of the app.

“No new users are to be added by the said TPAP until the existing users are migrated satisfactorily to a new handle,” the RBI had stated.

A PSP bank, either through its own application or a TPAP, onboards and registers customers on UPI, linking 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. 

Last month, the app recorded a decline in the volume and value of transactions processed. 

The application processed 1,405.7 million transactions in volume and transactions worth ~1.65 trillion in February 2024, according to the NPCI data.  In January, the application processed 1,569.63 million transactions amounting to ~1.92 trillion. 

First Published: Mar 15 2024 | 1:08 AM IST

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