Paytm shifts offline merchant business to subsidiary post-RBI’s PA license
In a significant development, Paytm parent One 97 Communications has announced that it has completed the transfer of its offline merchants’ payment business to its wholly-owned subsidiary, Paytm Payments Services Limited (PPSL). This move comes on the heels of PPSL receiving the Reserve Bank of India’s (RBI) license to operate as a Payment Aggregator (PA). The approval from the RBI is a major milestone for Paytm, as it will now be able to resume the onboarding of new merchants, a process that had been put on hold since November 2022.
The RBI’s Payment Aggregator license is a crucial requirement for companies that intend to facilitate online payment transactions on behalf of merchants. As a Payment Aggregator, PPSL will be responsible for collecting payments from customers and transferring them to merchants. The license also enables PPSL to provide a range of payment services, including credit and debit card transactions, net banking, and UPI transactions.
The transfer of the offline merchant business to PPSL is a strategic move by Paytm, as it will enable the company to comply with the RBI’s guidelines for Payment Aggregators. The RBI had introduced the Payment Aggregator framework in 2020, with the aim of regulating online payment transactions and ensuring that they are secure and reliable. As part of this framework, the RBI requires Payment Aggregators to maintain a minimum net worth of Rs 15 crore and to comply with certain operational and security requirements.
By transferring its offline merchant business to PPSL, Paytm is able to ensure that its payment services are compliant with the RBI’s regulations. The move also enables Paytm to focus on its core business of providing digital payment services to consumers and merchants. Paytm’s offline merchant business is a significant part of its overall operations, with the company having a large network of merchants across the country.
The RBI’s approval of PPSL’s Payment Aggregator license is a major positive for Paytm, as it will enable the company to resume the onboarding of new merchants. The onboarding process had been put on hold since November 2022, when the RBI had directed Paytm to stop onboarding new merchants due to certain regulatory issues. The approval of the Payment Aggregator license will enable Paytm to expand its merchant network and increase its market share in the digital payments space.
The development is also significant for the digital payments industry as a whole, as it highlights the importance of regulatory compliance in the sector. The RBI’s Payment Aggregator framework is designed to ensure that online payment transactions are secure and reliable, and that consumers are protected from fraudulent activities. By complying with the RBI’s regulations, Paytm is able to demonstrate its commitment to providing secure and reliable payment services to its customers.
In addition to the Payment Aggregator license, PPSL will also be required to comply with other regulatory requirements, such as the RBI’s guidelines for know-your-customer (KYC) and anti-money laundering (AML). The company will also be required to maintain a high level of security and operational standards, in order to ensure that its payment services are secure and reliable.
The transfer of the offline merchant business to PPSL is a significant development for Paytm, as it will enable the company to expand its merchant network and increase its market share in the digital payments space. The approval of the Payment Aggregator license is a major positive for the company, as it will enable it to resume the onboarding of new merchants and provide a range of payment services to its customers.
In conclusion, the transfer of Paytm’s offline merchant business to PPSL is a strategic move that will enable the company to comply with the RBI’s regulations and expand its merchant network. The approval of the Payment Aggregator license is a major milestone for Paytm, as it will enable the company to resume the onboarding of new merchants and provide a range of payment services to its customers. The development is also significant for the digital payments industry as a whole, as it highlights the importance of regulatory compliance in the sector.
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