Yes Bank Open to Acquiring Paytm's Merchants as Paytm Faces RBI Restrictions

29 Feb 2024 , 12:32 PM

Yes Bank’s CEO, Prashant Kumar, expresses openness to taking over merchants acquired by Paytm Payments Bank Ltd (PPBL) pending KYC compliance verification and due diligence.

Kumar sees this as a significant opportunity, especially considering Paytm’s large merchant customer base. The potential acquisition aligns with Yes Bank’s strategy for cross-selling, particularly in lending, providing long-term benefits.

Yes Bank emphasizes the importance of a proper KYC compliance process to be undertaken if the acquisition of these merchants succeeds.

Regulatory clarity is highlighted by Kumar, stating that risks identified in compliance or any other area within Paytm (and PPBL) must be resolved rather than shifted to other entities.

Paytm has over 3 crore merchants, with around 60 Lakh using PPBL as their settlement savings account, now rendered inoperative except for withdrawal or fund transfer.

One97 Communications, Paytm’s parent company, leveraged PPBL for other merchants, who use different commercial bank accounts for settlements.

Paytm’s total merchant GMV processed for July and August 2023 was around Rs 3 Lakh Crore, marking a YoY growth of 43%. Yes Bank’s CEO’s statements come amid RBI’s restrictions on PPBL, forcing Paytm to seek bank partnerships to sustain its UPI business.

RBI directs the migration of Paytm’s UPI @paytm handles to three or four commercial banks, requiring special approval for seamless functioning beyond March 15.

Paytm partners with Axis Bank, HDFC Bank, and Yes Bank for UPI services, transitioning to operate as a third-party application provider (TPAP) upon NPCI approval. Paytm aims to become a TPAP similar to competitors like Google Pay and PhonePe, adapting to a new model following PPBL’s restrictions.

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