RBI asks NPCI to ensure seamless migration for UPI users of Paytm Payments Bank

The Reserve Bank of India (RBI) has directed the National Payments Corporation of India (NPCI) to make alternative arrangements for customers using the Unified Payments Interface of Paytm Payments Bank Ltd (PPBL) to ensure a seamless migration of ‘@paytm’ handles. The RBI stated that no new users should be added by the TPAP until all existing users are migrated satisfactorily.

In the event of NPCI granting Third Party Application Provider (TPAP) status to One97 Communication Ltd (OCL), it may be stipulated that ‘@paytm’ handles “are to be migrated in a seamless manner from Paytm Payments Bank to a set of newly identified banks to avoid any disruption.” The central bank emphasized the importance of having multiple payment app providers to minimize concentration risk in the UPI system.

NPCI may facilitate certification of 4-5 banks as payment service providers capable of processing high volumes of UPI transactions, as Paytm Payments Bank will not be able to accept further credits into customer accounts and wallets after March 15. Additional steps have become necessary to ensure seamless digital payments for UPI customers using ‘@paytm’ handle operated by PPBL.

For merchants using PayTM QR Codes, OCL may open settlement accounts with one or more PSP Banks other than Paytm Payments Bank. The RBI also reminded holders of FASTag and National Common Mobility Cards issued by PPBL to make alternative arrangements before March 15, 2024, to avoid any inconvenience.

The RBI’s directive highlights the need for smooth transition and minimal disruption for users of the UPI system, especially those utilizing ‘@paytm’ handles through Paytm Payments Bank. By implementing these alternative arrangements and migrating users to new handles, the RBI aims to ensure a secure and efficient digital payment ecosystem for all stakeholders involved.