Paytm: Yes Bank To Likely Acquire Majority Merchant Accounts | NDTV Profit Exclusive

Paytm has also likely applied for a third-party application provider licence from the National Payment Corporation of India in collaboration with Yes Bank and Axis Bank, the people said.

Since a deal has almost been finalised and the requisite documents have been submitted, approval from the NPCI is expected shortly, the people quoted above added. With this, the two banks would become the payment service providers for Paytm for its UPI channel.

Yes Bank is one of the largest banks in the UPI transaction space. It processed 34,198 crore of pay and 40,443 crore of receipt transactions just in the month of January, the highest among banks.

Axis Bank recorded 31,831 crore in pay and 16,961 crore in receipt transactions last month.

Previously, Yes Bank was the sole bank backing UPI transactions on market leader Phonepe. After the lender went through a reconstruction process in March 2020, the payments app onboarded other banks.

Phonepe accounted for 57,345 crore transactions worth over Rs 9 lakh crore in January, the highest by any third-party application. In comparison, Paytm Payments Bank saw 14,424 crore transactions worth over Rs 1.64 lakh crore, coming in third.

On Feb. 23, the Reserve Bank of India also directed NPCI to ensure alterative arrangements using Paytm Payments Bank's UPI services. It asked NPCI to examine One97 Communications Ltd.'s request to become a third-party application provider for its UPI channel.

While RBI asked NPCI to facilitate the certification of four or five banks for this, as of now, only two have been finalised, the people quoted above said.

NDTV Profit previously reported that Paytm was looking to have three banks as a banking partner, and Yes Bank, Axis Bank and HDFC Bank were its top picks.

Earlier this month, Paytm also shifted its nodal account to Axis Bank by opening an escrow account.

The developments come in response to the RBI's stringent curbs on Paytm Payments Bank on Jan. 31, owing to regulatory lapses.

The payments bank cannot accept further credits into its customer accounts and wallets after March 15.

Paytm Payments Bank, One97 Communications Ltd. and NPCI refused to respond to these queries. And those sent to Axis Bank and Yes Bank did not elicit a response till the time of publishing this story.