Paytm likely to onboard HDFC Bank as the third merchant acquiring partner this week

Paytm to partner with HDFC Bank this week for the merchant business

Mobile payments firm One97 Communications Ltd, which runs Paytm, is likely to sign private sector lender HDFC Bank as the third partner for migrating merchants on the Paytm platform, according to a couple of sources familiar with the matter.

These merchants were onboarded on the Paytm app as UPI merchants by the embattled Paytm Payments Bank Limited (PPBL), which was asked by the Reserve Bank of India to stop all banking services from March 15.

Axis Bank and Yes Bank have already gone live on the Paytm platform. There are an estimated 3 crore merchants on the OCL platform. Paytm is also in discussions with Canara Bank and Kotak Mahindra Bank, with the former likely to go live next week.

Paytm, HDFC Bank, Canara Bank, and Kotak Mahindra Bank did not respond to Moneycontrol queries on the merchant acquisition business.

Meanwhile, HDFC Bank and SBI are likely to go live this week as payment service provider (PSP) banks for Paytm’s third party application provider (TPAP) business to run the UPI consumer business. Paytm has an estimated 9 crore UPI users on its platform.

Yes Bank and Axis Bank went live on the Paytm UPI platform on March 15, the day RBI's deadline for PPBL to stop all banking operations ran out. On the official website of National Payments Corporation of India (NPCI), which runs UPI, SBI and HDFC are listed as works in progress.

Yes Bank had gone live with a closed user group of users with @ptyes handle while Axis Bank has gone with @ptaxis handle. SBI will go with @ptsbi and HDFC will go with @pthdfc handles.

Yes Bank has the additional role of migrating existing @paytm handles as of now. Paytm has around 90 million UPI users who are using @paytm handles. Other banks will also join Yes Bank in taking over these handles gradually. According to a banking source close to the development, Yes Bank has taken ownership of the maintenance of PPBL’s PSP banking services.

Hassle free migration

Paytm has around 11 percent market share in UPI and processes more than 3 billion beneficiary transactions and around 1.6 billion outgoing transactions. A seamless migration from PPBL to other banks is required for the world's largest real-time payment system UPI to function without any hassles.

The RBI, which imposed punitive restrictions on PPBL, has allowed OCL merchants and UPI users to continue using their handles, QR codes, and point-of-sale (PoS) machines even after March 15, when the restrictions come into force. This move by the regulator is to avoid any disruption to merchant and consumer payments.

Moneycontrol reported that while NPCI wants multiple banks to migrate the merchant accounts to avoid concentration risks, the commercial discussions between Paytm and banks will decide which partnerships will come through. The fact that banks also need to do the KYC of most of the merchants is an additional expense delaying the discussions.