The Reserve Bank of India (RBI) has turned down Paytm Payments Services Limited’s application to seek licence to operate as a payment aggregator within the country, the company said in a regulatory filing. The central bank has now asked PPSL to re-submit 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 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).
The fintech company re-submitted the required documents in September 2021. The RBI has now responded to the application.
The fintech company will require necessary approval for past downward investment from One97 Communications Ltd (OCL) into PPSL, to comply with the country’s foreign direct investment (FDI) guidelines. Till the approvals are cleared, the fintech company will not onboard new online merchants.
Paytm spokesperson said, “The RBI has not rejected our application, but has simply asked us to reapply in 120 days. We are taking all the necessary steps and are hopeful of getting the required approvals soon.”
The company clarified that RBI has not noted any other “material observations”.
“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,” PPSL’s statement said.
The payment aggregator framework was introduced in March 2020, which mandates that only RBI-approved firms can offer payment services to merchants. RBI’s PAs guidelines state that a single entity cannot continue to provide an e-commerce marketplace along with payment aggregator services. Such payment aggregator services must be separated from the e-commerce marketplace business.
A payment aggregator offers various payment services to merchants and e-commerce sites by a bunch of payment instruments from customers. With such payment aggregator services, merchants need not create 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.
RBI had said that non-bank companies offering PA services should apply for authorisation, which is granted after required applications are verified by the central bank, by June 30, 2021. The deadline was then extended to September 30, 2021.
Earlier, MobiKwik's application was also rejected by the RBI. In October this year, it was reported that it had reapplied for the licence for Zaakpay.
(With agency inputs)
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