According to a regulatory filing, the banking regulator RBI has halted Paytm Payments Services’ onboarding of online merchants, despite the company’s claim that this will not materially affect its business.
In order to comply with the Reserve Bank of India’s (RBI) payment aggregator (PA) guidelines, One97 Communications (OCL), the company that owns the Paytm brand, proposed to transfer the payment aggregator services business it had been engaged in to Paytm Payments Services (PPSL) in December 2020. However, the banking regulator had rejected its application.
In September 2021, the corporation submitted the necessary paperwork once more.
Paytm reported that in response to a request for authorization to offer PA services to online retailers, PPSL has now got a letter from RBI.
According to the letter, PPSL must “not onboard new online merchants” and “seek necessary approval for past downward investment from the company into PPSL, to comply with FDI Guidelines.”
According to Paytm’s regulatory filing, it has 120 calendar days to resubmit the PA application.
New online merchants won’t be accepted by the company while permissions are still pending.
PAs are organisations that make it easier for merchants and e-commerce sites to accept different payment instruments from customers in order to fulfil their payment commitments without the need for the latter to develop their own payment integration system.
The RBI’s PAs guidelines state that a single organisation cannot continue to offer both payment aggregator services and an e-commerce marketplace, and that the payment aggregator services must be distinct from the e-commerce marketplace business.
Paytm added that the RBI had made no significant observations and that the action had no major impact on its operations or income because the notification from the institution only applied to the onboarding of new online retailers.
“We can keep bringing on new offline retailers and provide them with payment options like All-in-One QR, Soundbox, Card Machines, etc. The services will not change for current online retailers, so PPSL can continue doing business with them. We anticipate timely approvals being granted so that we can resubmit the application “said Paytm.