One97 Communications Limited, the parent company of Paytm, has received approval from the National Payments Corporation of India (NPCI) to resume onboarding new users for its Unified Payments Interface (UPI) services. This comes after a temporary suspension earlier in 2024, imposed by the Reserve Bank of India (RBI) due to procedural and compliance concerns. The suspension followed directives issued on January 31 and February 16, 2024. Paytm’s approval comes in response to a request made by Vijay Shekhar Sharma, the company’s Founder and CEO, on August 1, 2024.
The NPCI’s green light, announced by One97 Communications to stock exchanges on October 22, 2024, comes with strict compliance requirements. Paytm must adhere to detailed procedural guidelines, including risk management protocols, app branding standards, QR code regulations, and multi-bank partnerships. The company also needs to ensure compliance with market share rules applicable to Third-Party Application Providers (TPAP).
Additionally, Paytm must meet the regulatory standards set forth in the Payments and Settlement Systems Act of 2007, the Information Technology Act of 2000, and the Digital Personal Data Protection Act of 2023. It is also required to comply with NPCI’s 2018 guidelines on the storage and protection of payment system data. Another key aspect involves maintaining transparency and accountability through a tri-partite agreement with NPCI and its Payment Service Provider (PSP) banks.
This approval marks a significant moment for Paytm, as it looks to strengthen its position in India’s competitive UPI landscape, where it faces fierce competition from players like Google Pay, PhonePe, and WhatsApp Pay. The ability to onboard new users is critical for Paytm’s growth, as UPI continues to dominate digital payments in India, particularly in retail and online transactions.
Despite the positive news, Paytm’s shares closed almost 6% lower at ₹684 on October 22, 2024. The stock has delivered negative returns of over 25% in the past year, though it has managed a modest 6% gain in 2024 on a year-to-date basis.
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