Paytm: Paytm received approval from the National Payments Corporation of India (NPCI) to start onboarding new users to its Unified Payments Interface (UPI) platform. This decision comes after an 8-month ban that had been imposed due to regulatory non-compliance. According to Paytm’s filing with the Bombay Stock Exchange (BSE), the company will now need to strictly adhere to NPCI’s guidelines, which include protocols related to risk management, app branding, and the protection of customer data. The green light from NPCI marks a significant relief for Paytm, which has been unable to expand its UPI user base since early 2024.
Why Was Paytm Banned?
The ban on Paytm’s ability to onboard new UPI users was initiated in January 2024 after the Reserve Bank of India (RBI) found the company in violation of operational guidelines. Key concerns included Paytm’s handling of risk management processes and compliance with data protection laws. Reports indicated that the company faced issues with the secure storage of customer payment data, which fell short of regulatory standards. As a result, the ban was enforced to ensure that Paytm improved its practices before continuing to grow its UPI user base.
How Did the Ban Affect Paytm?
The ban had a significant impact on Paytm’s position in the UPI market. Before the restrictions, Paytm held a 13% market share in UPI payments, but by October 2024, its share had dwindled to just 8%. During this time, competitors like PhonePe and Google Pay, which together handle around 87% of UPI transactions, capitalized on Paytm’s absence, further consolidating their dominance in India’s digital payments landscape. The inability to onboard new users severely limited Paytm’s growth potential in the competitive UPI ecosystem.
What’s Next for Paytm?
With the NPCI’s approval, Paytm is expected to regain its footing in the UPI market, though it faces strict regulatory conditions. The company must now enhance its risk management systems, ensure compliance with data protection laws, and operate under a multi-bank model for UPI transactions. Although it will take time to recover its lost market share, this approval provides Paytm with a crucial opportunity to reestablish itself in the rapidly growing digital payments industry.
The road ahead may be challenging, but with proper compliance and strategic growth efforts, Paytm could once again become a key player in India’s UPI market.
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