RBI Asks Paytm To Reapply For Payment Aggregator Licence

It is said that the company will not onboard new online merchants till the time approvals remain pending

Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

One97 Communications that owns the Paytm brand said in a press release that the Reserve Bank of India has asked the Paytm Payment Services Limited (PPSL) to resubmit the application for a payment aggregator Licence within 120 calendar days.

Paytm Twitter handle

As per reports, a letter from RBI has asked the payment services company to seek regulatory approval for past downward investment from One97 Communications to comply with foreign direct investment norms. It is said that the company will not onboard new online merchants till the time of approval.

"Our 100 per cent 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," said the company in an exchange filing.

The release added that, "This has no material impact on our business and revenues, since the communication from RBI is applicable only to onboarding of new online merchants. We can continue to onboard new offline merchants and offer them payment services including All-in-One QR, Soundbox, Card Machines, etc."

As per the recent report by BT, the shares of One97 Communications (Paytm) fell over 4 per cent in Monday's trade after the banking regulator RBI stopped onboarding of online merchants by Paytm Payments Services (PPSL), even as the company insists it would have no material impact on its business.

According to earlier reports, last year, Paytm had transferred its online payment aggregation business to PPSL, which had applied to the RBI for authorisation for acting as a payment aggregator under the Payment and Settlement Systems Act, 2007.

A payment aggregator is third-party that manages and processes merchants' online transactions with consumers, allowing merchants to be more hands-off in their payment process.