RBI Pauses Onboarding of Online Merchants by Paytm Payments Services; firm says no material impact on biz

• paym said PPSL has received a letter from RBI in response to an application for authorization to provide PA services to online merchants.
• Paytm said in the registration application that it can resubmit the PA application within 120 calendar days.
• The company will not be onboarding any new online merchants until approvals are pending.

Banking regulator RBI has paused the onboarding of online merchants Paytm Payment Servicesthough the company said it will have no material impact on its business, according to a filing for filing.

One97 Communications (OCL), owner of the Paytm brand, had proposed to transfer its payment aggregation services business to Paytm Payments Services (PPSL) in December 2020 to comply with the Payment Aggregation (PA) Guidelines of the Reserve Bank of India (RBI), but the banking regulator had rejected his application.

The company resubmitted the required documents in September 2021.

Paytm said PPSL has now received a letter from RBI in response to an application for authorization to provide PA services to online merchants.

According to the letter, PPSL is required to “seek necessary approval for the company’s previous downward investments in PPSL, to comply with FDI guidelines” and “not to hire any new online sellers.”

Paytm said in the registration application that it can resubmit the PA application within 120 calendar days.

The company will not be onboarding any new online merchants until approvals are pending.

PAs are entities that facilitate e-commerce sites and merchants to accept various payment instruments from customers to fulfill their payment obligations without merchants having to create their own payment integration system.

Under RBI’s PAs guidelines, a single entity cannot continue to provide an e-commerce marketplace along with payment aggregation services and such payment aggregation services must be separated from the e-commerce marketplace business.

Paytm further said that there were no material observations from RBI and that the move has no material impact on its business and earnings as the central bank’s communications only apply to the onboarding of new online merchants.

“We can continue to onboard new offline merchants and offer them payment services, including All-in-One QR, Sound box, Card machines, etc. Similarly, PPSL may continue to do business with existing online merchants, whose services remain unaffected. We are hopeful that we will receive the necessary approvals in a timely manner and be able to resubmit the application,” said Paytm.

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