RBI Pauses Onboarding Of Online Merchants By Paytm Payments Services

The Reserve Bank of India (RBI) has put a pause on onboarding of online merchants by Paytm Payments Services (PPSL). 

Meanwhile, the company has said it will have no material impact on its business, according to a regulatory filing.

“This has no material impact on our business and revenues, since the communication from RBI is applicable only to onboarding of new online merchants”, Paytm said in the exchange notification.

One97 Communications (OCL), which owns the Paytm brand, had proposed to transfer the payment aggregator services business undertaken by it to Paytm Payments Services (PPSL) in December 2020 to comply with payment aggregator (PA) guidelines of the Reserve Bank of India (RBI) but the banking regulator had rejected its application.     

The central bank said that PPSL is required to re-submit its PA application within 120 calendar days. 

Other steps include seeking necessary approval for past downward investment from Paytm into PPSL to comply with the government’s foreign direct investment (FDI) guidelines, and not onboarding new online merchants.

The company added that PPSL can continue to do business with existing online merchants, for whom the services will remain unaffected. “We are hopeful of receiving the necessary approvals in a timely manner and resubmitting the application,” the company said.

Paytm said PPSL has now received a letter from RBI in response to an application for the authorisation to provide PA services for online merchants.     

As per the letter, PPSL is required to "Seek necessary approval for past downward investment from the company into PPSL, to comply with FDI Guidelines" and "not onboard new online merchants".     

Paytm, in the regulatory filing, said it can resubmit the PA application within 120 calendar days. The company will not onboard new online merchants till the time approvals remain pending.        

"We can continue to onboard new offline merchants and offer them payment services including All-in-One QR, Soundbox, Card Machines, etc. Similarly, PPSL can continue to do business with existing online merchants, for whom the services will remain unaffected. We are hopeful of receiving the necessary approvals in a timely manner and resubmitting the application," Paytm said.

(With inputs from PTI)