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 after PPSL received the Reserve Bank of India’s (RBI) license to operate as a Payment Aggregator (PA). The development is a major milestone for Paytm, as it paves the way for the company to resume the onboarding of new merchants, a process that had been under an RBI freeze since November 2022.
The RBI had introduced the Payment Aggregator (PA) license framework in 2020, with the aim of regulating and overseeing the payment aggregation industry in India. The framework requires payment aggregators to obtain a license from the RBI in order to operate in the country. Paytm, being one of the largest payment aggregators in India, had to apply for the license and comply with the RBI’s regulations.
The transfer of the offline merchants’ payment business to PPSL is a strategic move by Paytm, as it allows the company to separate its payment aggregation business from its other financial services offerings. This separation is in line with the RBI’s guidelines, which require payment aggregators to operate as separate entities from other financial services companies.
With the RBI’s approval, PPSL will now be responsible for managing Paytm’s offline merchants’ payment business, including the onboarding of new merchants, payment processing, and settlement. The subsidiary will also be responsible for ensuring that the payment business is operated in compliance with the RBI’s regulations and guidelines.
The resumption of new merchant onboarding is a significant development for Paytm, as it will enable the company to expand its merchant network and increase its market share in the payment aggregation industry. The company had been unable to onboard new merchants since November 2022, due to the RBI freeze, and the lifting of the freeze is expected to provide a major boost to its business.
The development is also expected to have a positive impact on Paytm’s financial performance, as the company will now be able to generate revenue from its payment aggregation business. The payment aggregation industry in India is highly competitive, with several players operating in the market, including Google Pay, Amazon Pay, and PhonePe. However, Paytm’s strong brand presence and large merchant network are expected to give it a competitive edge in the market.
The transfer of the offline merchants’ payment business to PPSL is also expected to enhance the overall customer experience, as it will enable Paytm to offer a more seamless and integrated payment experience to its customers. The company will now be able to offer a range of payment services, including online and offline payment processing, to its customers, which is expected to increase customer loyalty and retention.
In addition to the benefits for Paytm, the development is also expected to have a positive impact on the Indian payment ecosystem as a whole. The RBI’s PA license framework is expected to promote transparency, accountability, and security in the payment aggregation industry, which is critical for the growth and development of the Indian economy.
In conclusion, the transfer of Paytm’s offline merchants’ payment business to PPSL is a significant development for the company, as it paves the way for the resumption of new merchant onboarding and the expansion of its payment aggregation business. The development is also expected to have a positive impact on the Indian payment ecosystem, as it promotes transparency, accountability, and security in the payment aggregation industry.
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