The RBI has halted the onboarding of online merchants by Paytm payments.
Paytm stated that the RBI decision has had no material impact on its business.
New Delhi: Banking regulator RBI has placed a pause on the onboarding of online merchants by Paytm payments services, while the organisation said it might not have any material impact on its commercial enterprise, according to a regulatory filing.
One97 Communications (OCL), which owns the Paytm brand, had proposed to transfer the payment aggregator services business undertaken via it to Paytm Payments Services (PPSL) in December 2020 to conform with payment aggregator (PA) suggestions of the Reserve Bank of India (RBI), but the banking regulator had rejected its application.
The company re-submitted the desired documents in September 2021.
Paytm said PPSL has now received a letter from RBI in response to an application for authorization to provide PA services for online merchants.
A letter states that PPSL must obtain the open-in-app funding necessary to function, comply with FDI tips, and not onboard new online merchants.
Paytm, in its regulatory filing, said it may resubmit the PA application within 120 calendar days.
The company will no longer be given new online merchants until all essential approvals are acquired.
PAs are entities that enable e-commerce sites and merchants to accept a variety of payment devices from customers in order to complete their payment duties without the need for merchants to create their own payment integration system.
According to the RBI's PAS guidelines, a single entity can't continue to provide an e-commerce marketplace in conjunction with payment aggregator services, and such aggregator offerings need to be separated from the e-commerce marketplace business.
Paytm further said there were no material observations from RBI, and the circulate has no material impact on its commercial enterprise or revenues for the reason that communication from the central bank applies only to the onboarding of the latest online merchants.
Businesses will receive integrated QR codes, soundboxes, and card readers as part of our offline merchant onboarding approach. PPSL can continue conducting business with present online merchants and card readers because the services won't change for them. The services will not change for current online merchants, so PPSL can continue doing business with them. Paytm stated, "We're hopeful of getting the crucial clearances on time and resubmitting the application."