Paytm Explores Partnership With Leading Banks To Transition PPBL Merchant Accounts

Paytm, spearheaded by One 97 Communications Ltd, is actively engaged in discussions with prominent banks. Axis Bank, Yes Bank, Canara Bank, and Kotak Mahindra Bank have emerged as frontrunners in talks to potentially partner with Paytm for the migration of merchants currently onboarded through its troubled entity, Paytm Payments Bank Limited (PPBL).

However, the extent of involvement from these banks remains uncertain, as reported by Moneycontrol, citing informed sources.

With over 3 crore merchants relying on Paytm's mobile payment services, PPBL served as the crucial payment service provider (PSP) partner bank for One 97 Communications Ltd to onboard these merchants. Despite regulatory restrictions imposed by the Reserve Bank of India (RBI) on PPBL, merchants and unified payments interface (UPI) users affiliated with One 97 Communications Ltd were permitted to continue using their handles, QR codes, and point-of-sale (POS) machines beyond the stipulated deadline of March 15.

According to insights gleaned from the report, potential partner banks are evaluating annual expenses ranging from Rs 50-70 crore to manage and process the multitude of transactions facilitated by Paytm merchants. The costs are anticipated to fluctuate based on factors such as the nature of merchants onboarded by the banks and the volume of transactions valued below Rs 2,000.

A senior executive quoted by Moneycontrol shed light on the ongoing developments, affirming that documentation processes are underway, with discussions at various stages of progression. The executive hinted at the possibility of a deal materializing as early as this week, signaling significant strides in the negotiation process.

In a notable development, Prashant Kumar, Managing Director and CEO of Yes Bank, expressed the bank's willingness to absorb merchants currently serviced by PPBL. Kumar emphasised the importance of compliance and due diligence, particularly concerning know-your-customer (KYC) verification, to ensure a seamless transition for merchants onto Yes Bank's platform. He underscored the imperative of mitigating risks and upholding regulatory compliance throughout the migration process, echoing sentiments echoed by the RBI.

Furthermore, Axis Bank, Yes Bank, and HDFC Bank have previously collaborated with One 97 Communications Limited to oversee Paytm's consumer-side UPI business as a third-party application provider (TPAP). This pre-existing partnership lays a foundation for potential cooperation in migrating PPBL merchant accounts.

Of the expansive network of PPBL merchants, approximately 20 percent, or nearly Rs 60 lakh, utilize PPBL as their settlement savings account. For the remaining merchants, One 97 Communications Limited facilitated acquisitions while furnishing QR codes and handles, with settlements routed through other commercial bank accounts, as per the company's exchange filings.

As negotiations progress and potential partnerships materialize, Paytm remains steadfast in its commitment to ensuring a seamless transition for its merchants. These developments underscore the company's resilience and adaptability in navigating regulatory hurdles while safeguarding the interests of its vast network of merchants and users.