Paytm Eyes Banking Partners to Keep UPI Services Alive After Payments Bank Shutdown

Mumbai: Facing the closure of its payments bank arm, Paytm, India’s leading digital payments platform, is reportedly in talks with major banks to maintain its Unified Payments Interface (UPI) services.

To ensure a smooth transition, Paytm has reportedly approached Axis Bank, HDFC Bank, State Bank of India (SBI), and Yes Bank to act as its partner banks for UPI processing. These discussions aim to onboard the banks in phases, with Axis Bank potentially becoming the first partner.

The Reserve Bank of India (RBI) directed Paytm Payments Bank to cease operations by March 15th, posing a potential disruption for the millions of users who rely on the platform for UPI transactions.

UPI, a real-time payment system operated by the National Payments Corporation of India (NPCI), enables seamless money transfers across different banks. The RBI has instructed NPCI to assess Paytm’s request to become a third-party application provider, with the involvement of several banking partners.

Reports revealed that negotiations are underway to onboard these prominent banks, starting with those capable of handling large transaction volumes efficiently.

It’s anticipated that Axis Bank will be the initial banking partner for Paytm, with others likely to follow suit. NPCI will evaluate the technological capabilities of these banks, a process expected to take approximately a month.

Despite the regulatory challenges, Paytm remains a significant player in UPI payments, processing 1.6 billion transactions monthly, trailing only PhonePe and Google Pay.

Users of Paytm will transition to the UPI handle associated with the partner bank. Prashant Kumar, CEO of Yes Bank, emphasized that any collaboration with Paytm would adhere to RBI regulations and consider associated risks and commercial viability.