Paytm chooses SBI as the fourth bank for its UPI business

14 Mar 2024 , 11:38 AM

The largest lender in the country, State Bank of India, has partnered with One97 Communications, the company behind the Paytm brand and app, to offer consumer UPI payments.

Due to the RBI’s actions against Paytm Payments Bank Limited (PPBL), Paytm’s UPI service, which was previously facilitated by PPBL, has compelled the mobile payment company to pursue partnerships with banks to operate as a third-party application provider (TPAP), following the model of its major rivals PhonePe and Google Pay.

Paytm previously announced TPAP collaborations with Axis Bank, Yes Bank, and HDFC Bank. The governing agency National Payments Corporation of India requires most significant UPI companies to have at least three banking partners.

The NPCI, which handles UPI payments, is working with all banks to speed up the TPAP procedure by March 15.

UPI’s bank partners are payment service providers (PSP), who connect the TPAP to the banking network. Because OCL already was in cooperation with PPBL, it did not require any more bank partners.

On February 23, the RBI said that clients and merchants with ‘@paytm’ handles will be smoothly moved from PPBL to a set of newly designated banks to prevent interruption.

Further, reports suggest that Paytm is in discussions with Axis, Canara, Yes, and Kotak Mahindra Bank regarding the transfer of merchant accounts from payment banks.

Third-party applications rely significantly on PSP banks to ensure that payments are processed quickly and payment failures are kept to a minimum. To mitigate risk, players like as PhonePe and Google Pay usually have at least three bank relationships.

Over the previous three years, PPBL has been the UPI ecosystem’s top beneficiary bank, accounting for more than 20% of incoming credit transactions. Despite its size, it routinely ranks among the banks with the fewest transaction failures.

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