Paytm looking to migrate UPI payments to four banks, eyes TPAP status before March 15

Digital payments major Paytm is racing against time to migrate its banking services from Paytm Payments Bank to other lenders. The National Payments Corporation of India, which runs the Unified Payments Interface (UPI) railroad, is working to certify Paytm’s application to become a third-party payment app, said two senior bankers in the know.

Four banks – Yes Bank, Axis Bank, HDFC Bank and State Bank of India – will support Paytm’s consumer-facing UPI payments, one of the bankers said.

The @Paytm UPI handle, which was issued by the payment bank to its customers through the Paytm app, might change after March 15, the bankers said.

Paytm is run by listed firm One 97 Communications (OCL), which owns a 49% stake in Paytm Payments Bank (PPBL) and refers to it as an associate company.

“They will be issued fresh handles from the back-end and eventually customers will be migrated to each of the four banks in such a way that there is no extra pressure on any one entity,” one of the bankers said.

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While the Reserve Bank of India had asked Paytm Payments Bank to stop offering basic banking services after February 29, it eventually extended the deadline to March 15.

“We are actively engaging with NPCI on our TPAP status and will promptly notify the exchanges once approvals are received and bank partnerships are established. As a publicly-listed company, we are bound by regulations that prevent us from disclosing timelines and partner bank details before official announcements through stock exchanges,” the company said in a response to ET queries.

The four banks and NCPI did not respond to emails seeking comment.

The bankers explained that the Paytm handle could be renamed so that there are distinct identifiers which can help NPCI route the settlements to the right bank. The UPI switch in the back-end helps route these transactions, they said.

On February 20, Paytm shifted its nodal accounts to Axis Bank. This helped the Noida-based fintech to settle UPI payments being made by consumers to its merchants via QR codes.

Responding to ET’s queries on merchant payments, a Paytm spokesperson said: “We would like to inform you that merchants were onboarded by OCL, with PPBL serving as the PSP. These merchants will continue to remain with OCL, regardless of any changes in banking partnerships.”

Industry insiders aware of the development told ET that banks are set to earn from the float income they will generate due to daily transactions processed by Paytm as an application. According to data from NPCI, the Paytm app initiated 1.3 billion UPI payments in February with around Rs 1.5 lakh crore being settled through the platform.

At its close on the BSE on Wednesday, Paytm’s stock price stood at Rs 351.9, down almost 5%. On January 31, before the regulator announced its action on PPBL, the stock had closed at Rs 761.

The current market capitalisation of the fintech firm stands at Rs 22,350 crore (approximately $2.7 billion).