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The Reserve Bank of India(RBI) has rejected the application Paytm Payments Services Limited to operate as payment aggregator. The banking regulator put a pause on onboarding of online merchants by Paytm Payments Services. The company will not onboard new online merchants till the time approvals remain pending.
The company in a exchange filing said,” Our 100% subsidiary, Paytm Payments Services Limited (“PPSL”), is in receipt of a letter from Reserve Bank of India (“RBI”) in response to an application from PPSL for the authorization to provide payment aggregator services (“PA application”) for online merchants.
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 company had re-submitted the required documents in September 2021.
As per the letter, PPSL is required to take the following steps and resubmit the PA application within 120 calendar days:
1. Seek necessary approval for past downward investment from the Company in to PPSL, to comply with FDI Guidelines
2. Not onboard new online merchants
There are no material observations other than what is mentioned above. 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 further said that the firm 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.
The firm said that it is hopeful of receiving the necessary approvals in a timely manner and resubmitting the application. PAs are entities that facilitate e-commerce sites and merchants to accept various payment instruments from customers for completion of their payment obligations without the need for merchants to create a separate payment integration system of their own.
According to RBI’s PAs guidelines, a single entity cannot continue to provide an e-commerce marketplace along with payment aggregator services and such payment aggregator services must be separated from the e-commerce marketplace business.
*with inputs from agencies
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John Miller has been writing about science, gaming, and tech culture for over a decade. He’s a top-rated reviewer with extensive experience helping people find the best deals on tech and more.
