National Payments Corporation of India (NPCI) has granted its approval to One97 Communications to participate on the UPI platform as a third-party application provider (TPAP) under the ‘multi-bank’ model.

Axis Bank, HDFC Bank, State Bank of India and Yes Bank will act as PSP (payment system provider) banks to One97, NPCI said in a release.

Yes Bank will also be the merchant acquiring bank for existing and new UPI merchants for OCL, as per which the ‘@Paytm’ UPI handles will be redirected to Yes Bank. This will enable existing users and merchants to continue to undertake UPI transactions and AutoPay mandates “in a seamless and uninterrupted manner”. 

Currently, all UPI transactions for Paytm are routed through Paytm Payments Bank.

“One 97 has been advised to complete migration for all existing handles and mandates, wherever required, to new PSP banks at the earliest,” the release said.

In February 2024, Paytm has reported shifting its nodal accounts to Axis Bank.

TPAP norms

As per NPCI guidelines and TPAP licensing norms, large TPAP licence holders (those processing more than 5 per cent of the total monthly volume/value of the UPI ecosystem) need to have a ‘multi bank model’, and associate with at least three and upto ten sponsor banks.

As of February 2024, Paytm Payments Bank was the third largest platform for UPI payments, after PhonePe and Google Pay. It processed 141 crore transactions worth ₹1.6-lakh crore during the month, falling steadily over the last couple of months.

Paytm’s market share fell to 10.8 per cent in terms of volumes from 12.7 per cent in January 2024 and 13 per cent as of December 2023. In terms of value of transactions, its share has fallen to 8.5 per cent from 10.3 per cent in January 2024 and 10.4 per cent as at the end of 2023.

Meanwhile, March 15 is the deadline for subsidiary Paytm Payments Bank to wind down its operations. Accordingly, all FasTag and NCMC card users with accounts linked to Paytm Payments Bank will be closed effective March 16. Wallet users will be allowed to use or withdraw their balances but will not be allowed to add money to their wallets post March 15.

Absorbing staff

The bank is facing exits and layoffs, with the lender expected to layoff at least 20 per cent of its workforce in certain divisions despite Founder Vijay Shekhar Sharma in February assuring employees that there would be no lay-offs. The bank is estimated to have 2,775 employees as of December 2023.

Parent company One97 is expected to absorb some of the laid off employees, sources said, adding that the lay-offs so far have largely been performance-linked. However, another source said that One97’s ability to take-on any of the bank employees will be heavily dependent on the payment platform’s growth prospects, operational business verticals and any future regulatory action.

The central bank is expected to supersede the board of Paytm Bank to ensure that all customer balances have been withdrawn or transferred before the bank licence is officially revoked.