The country's largest lender State Bank of India has partnered with One97 Communications, which runs Paytm brand and app, for its consumer UPI payments.
Paytm's UPI was powered by Paytm Payments Bank Limited (PPBL) and since the RBI's action on the latter, the mobile payments company has been forced to seek bank partnerships to become a third party application provider (TPAP), much like its larger competitors PhonePe and Google Pay.
Moneycontrol reported that Paytm had partnered with Axis Bank, Yes Bank and HDFC Bank for TPAP partnerships earlier. For most large UPI players, the regulatory body National Payments Corporation of India insists that they should have at least three bank partners.
NPCI, which runs UPI payments, is working with all the banks to expedite the TPAP process by March 15.
SBI, Paytm and NPCI did not respond to Moneycontrol queries on the UPI partnership.
The bank partners in UPI are payment service providers (PSP), which connect the TPAP to the banking network. Since OCL already had a partnership with PPBL, it did not require other bank partners.
On February 23, RBI said customers and merchants having ‘@paytm’ handles are to be migrated seamlessly from PPBL to a set of newly identified banks to avoid any disruption.
Meanwhile, Moneycontrol reported that Paytm is in talks with Axis, Canara, Yes and Kotak Mahindra Bank to migrate merchant accounts from payments bank.
Third-party apps are heavily dependent on PSP banks when it comes to the speed of the payments or even ensuring that payment failures are kept to a minimum. Players like PhonePe and Google Pay typically have at least three bank partnerships to minimise risk.
PPBL has been the largest beneficiary bank in the UPI ecosystem over the last three years with over 20 percent market share in inbound credit transactions. Despite its scale, it was consistently among the banks with the lowest transaction failures.
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