The Reserve Bank of India has finally given the green light to Paytm Payments Services Limited (PPSL) to operate as a Payment Aggregator. With this approval, PPSL, a wholly-owned subsidiary of One97 Communications Ltd, can start onboarding new online merchants again for its payment processing services. For Paytm, this isn’t just a regulatory milestone; it’s a welcome boost for its core merchant-focused business.
Key Takeaways
• RBI grants final authorisation for PPSL to function as a Payment Aggregator
• Paytm can now bring new online merchants onto its payment gateway
• Lifting of the 2022 ban on new merchant onboarding
• Positive implications for Paytm’s core merchant payment solutions across India
A Clear Path Forward for Merchant Services
The approval has been a long time coming. Back in March 2020, the RBI rolled out guidelines for Payment Aggregators, making it mandatory for all such companies to secure formal authorisation. For context, a Payment Aggregator essentially acts as the go-between, helping e-commerce platforms and merchants accept multiple payment methods from customers, then passing the funds along after a set period.
Paytm Payments Services initially received an in-principle nod but, in late 2022, the RBI instructed it to pause onboarding new online merchants until it got the final licence. The central bank also required a fresh application to align with foreign direct investment rules. Today’s announcement confirms that PPSL has ticked all the compliance boxes.
This clearance comes against the backdrop of regulatory troubles faced by Paytm Payments Bank Ltd (PPBL), a separate company under the same brand umbrella. While PPBL’s operations have been curtailed following RBI restrictions earlier this year, PPSL runs a different business entirely, managing merchant payments and aggregation rather than banking services. That distinction is now more important than ever, allowing Paytm to keep expanding its merchant network despite the setbacks in its banking arm.
With its licence secured, Paytm can step back into the competitive ring alongside other big players like Razorpay and Cashfree, both of which already hold final PA licences. For the millions of small businesses, startups, and established brands relying on Paytm’s infrastructure, this development signals continuity, stability, and a stronger push toward future growth.
Frequently Asked Questions (FAQs)
Q1: What is a Payment Aggregator (PA) licence?
A1: A Payment Aggregator licence is an authorisation granted by the RBI that allows a company to provide payment services for merchants. It enables the company to handle funds and process transactions between customers and online businesses.
Q2: Why was Paytm stopped from adding new merchants before?
A2: The RBI had asked Paytm Payments Services Ltd to temporarily stop onboarding new online merchants in November 2022 while its application for the Payment Aggregator licence was under review. This was to ensure the company complied with all regulatory guidelines before receiving final approval.
Q3: Is Paytm Payments Services the same as Paytm Payments Bank?
A3: No, they are different entities. Paytm Payments Services Ltd (PPSL) runs the payment gateway for merchants. Paytm Payments Bank Ltd (PPBL) was a separate banking firm that recently faced RBI restrictions and had to stop its key operations. The new licence is for PPSL, not PPBL.
Q4: What can Paytm do with this new licence?
A4: This licence allows Paytm to restart signing up new online merchants and offer them its full suite of payment processing services. This helps the company expand its merchant base and strengthen its position in the digital payments market.
Q5: Is it safe for merchants to use Paytm’s payment gateway now?
A5: Yes. The final approval from the RBI indicates that Paytm Payments Services Ltd has met the central bank’s stringent regulatory and compliance standards for operating as a Payment Aggregator.
