RBI Directs Smooth Transition For Paytm UPI Handles Ahead Of March 15 Deadline

The Reserve Bank of India (RBI) issued guidelines on February 23, 2024, for Paytm's Unified Payments Interface (UPI) handle, @paytm, to be smoothly transferred from Paytm Payments Bank to a set of new banks to minimise disruptions after March 15. From March 15, 2024, Paytm Payments Bank is not allowed by RBI to accept credits into customer accounts and wallets. Before the migration process starts, RBI asked the National Payments Corporation of India (NPCI) to consider One97 Communication Ltd's (OCL) request to become a Third-Party Application Provider (TPAP) for UPI, ensuring the continued operation of the Paytm application.

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RBI Guidelines

"Certain additional steps have become necessary to (i) ensure seamless digital payments by UPI customers using ‘@paytm’ handle operated by the Paytm Payments Bank, and (ii) minimise concentration risk in the UPI system by having multiple payment app providers," RBI said.

In the event of NPCI granting TPAP status to OCL, migration of '@paytm' handles will be seamless to select banks to avoid disruption. No new users are to be added by the said TPAP until all the existing users are migrated satisfactorily to a new handle, RBI directed.

A TPAP, according to NPCI, is a service provider participating in UPI through a PSP bank, whereas PSP bank onboards and registers customers on UPI, linking their bank accounts to their UPI identifications.

"For seamless migration of ‘@paytm’ handle to other banks, NPCI may facilitate certification of 4-5 banks as Payment Service Provider (PSP) Banks with demonstrated capabilities to process high volume UPI transactions," RBI said. OCL may open settlement accounts with one or more PSP Banks for merchants using Paytm QR Codes, RBI added.

Notably, migration of UPI handles only affects users and merchants with '@Paytm' UPI handles. Others with different UPI addresses don't need to take any action. Paytm Payments Bank customers are advised to make alternative arrangements with other banks by March 15.

According to NPCI data, Paytm Payments Bank was the third-largest UPI platform as of January 2024 end, with a 15 per cent market share, while PhonePe and Google Pay controlled 80 per cent of transactions.

Customers with accounts/wallets at Paytm Payments Bank are advised to make alternative arrangements with other banks before March 15, 2024, as previously advised by RBI.

RBI reiterated that the holders of FASTag and National Common Mobility Cards (NCMC) issued by Paytm Payments Bank, may make alternative arrangements before March 15, 2024, to avoid any inconvenience.