Paytm shifts offline merchant business to subsidiary post-RBI’s PA license
In a significant development, Paytm parent One 97 Communications has completed the transfer of its offline merchants’ payment business to its wholly-owned subsidiary, Paytm Payments Services Limited (PPSL). This move comes after PPSL received the Reserve Bank of India’s (RBI) license to operate as a Payment Aggregator (PA). The development is expected to have a positive impact on Paytm’s operations, particularly with regards to its offline merchant business.
The RBI had introduced the Payment Aggregator (PA) guidelines in March 2020, which mandated online payment aggregators to obtain a license from the central bank to operate. The guidelines aimed to regulate the growing online payment aggregator space and ensure that these entities comply with the RBI’s norms and regulations. Paytm, being one of the leading payment aggregators in the country, had to comply with these guidelines and obtain the necessary license to continue its operations.
The transfer of the offline merchant business to PPSL is a strategic move by Paytm to ensure compliance with the RBI’s PA guidelines. By doing so, Paytm has been able to separate its offline merchant business from its other operations, such as its e-wallet and online payment aggregator businesses. This separation is expected to help Paytm improve its operational efficiency and reduce the risk of any regulatory non-compliance.
The RBI’s approval of PPSL’s PA license application is a significant development for Paytm. The license will enable PPSL to resume the onboarding of new merchants, a process that had been under an RBI freeze since November 2022. The freeze had been imposed due to Paytm’s non-compliance with the RBI’s PA guidelines. With the license now in place, PPSL can restart its merchant onboarding process, which is expected to boost Paytm’s offline merchant business.
The impact of this development on Paytm’s business is expected to be significant. The company’s offline merchant business is a critical component of its overall operations, and the ability to onboard new merchants will help Paytm expand its reach and increase its transaction volumes. Additionally, the separation of the offline merchant business from its other operations is expected to improve Paytm’s operational efficiency and reduce the risk of any regulatory non-compliance.
The development is also expected to have a positive impact on Paytm’s revenue growth. The company’s offline merchant business is a significant contributor to its revenue, and the ability to onboard new merchants is expected to drive revenue growth. Furthermore, the license will enable PPSL to offer a wider range of payment services to its merchants, which is expected to increase the company’s average revenue per user (ARPU).
In recent years, Paytm has been focusing on expanding its offline merchant business, and the RBI’s approval of PPSL’s PA license application is a significant milestone in this journey. The company has been investing heavily in its offline merchant business, and the license will enable it to accelerate its growth plans. Paytm’s offline merchant business has been growing rapidly, and the company has been expanding its reach to newer markets and geographies.
The development is also expected to have a positive impact on the overall digital payments ecosystem in India. The RBI’s PA guidelines have been designed to regulate the growing online payment aggregator space and ensure that these entities comply with the central bank’s norms and regulations. The approval of PPSL’s PA license application is a significant development in this regard, as it will help to promote a more regulated and stable digital payments ecosystem.
In conclusion, the transfer of Paytm’s offline merchant business to PPSL is a significant development that is expected to have a positive impact on the company’s operations and revenue growth. The RBI’s approval of PPSL’s PA license application is a milestone in this journey, and it will enable the company to resume the onboarding of new merchants and expand its offline merchant business. The development is also expected to have a positive impact on the overall digital payments ecosystem in India, promoting a more regulated and stable environment for online payment aggregators.
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