The Reserve Bank of India (RBI) has turned down Paytm Payments Services Ltd’s application for seeking a license to operate as a payments aggregator within the country, the company said in a regulatory filing. The central bank has now asked PPSL to resubmit its payment aggregator (PA) services application within 120 calendar days i.e. four months. It is to be noted that One97 Communications (OCL), which owns the Paytm brand, had in December 2020 transferred the payment aggregator services business to Paytm Payments Services (PPSL) to comply with the payment aggregator (PA) guidelines. was proposed. Reserve Bank of India (RBI).
The fintech company resubmitted the necessary documents in September 2021. RBI has now responded to the application.
The fintech company will need necessary approvals for the previous downstream investment in PPSL from One97 Communications Limited (OCL) in order to comply with the country’s Foreign Direct Investment (FDI) guidelines. The fintech company will not onboard new online merchants until approval is received.
The company clarified that no other “material observation” has been noted by the RBI.
“This has no material impact on our business and revenue as the communication from RBI applies only to the onboarding of new online merchants. We may continue to onboard new offline merchants and offer them payment services including all QR, soundbox, card machines,” PPSL statement said.
RBI’s PA guidelines state that an entity cannot continue to provide an e-commerce marketplace with payment aggregator services. Such payment aggregator services should be segregated from e-commerce marketplace business.
A payment aggregator provides various payment services to merchants and e-commerce sites by a group of payment instruments from customers. With such payment aggregator services, merchants do not need to build a separate payment integration system of their own. The services provided under this are transactions by cash and cheque, online and offline touchpoints and others.
(with agency inputs)
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