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In a significant development for India's digital payments landscape, Paytm, the leading digital payments and financial services platform, has received approval from the National Payments Corporation of India (NPCI) to operate as a third-party UPI (Unified Payments Interface) app. This move comes after Paytm Payments Bank, a subsidiary of Paytm's parent company One97 Communications, lost its operating licence from the Reserve Bank of India (RBI). This blog explores the implications of Paytm's new status as a third-party UPI app and its potential impact on users and the broader fintech industry.

Paytm losing their banking licence

Paytm Payments Bank, launched in 2017, played a crucial role in driving financial inclusion in India by offering basic banking services to millions of unbanked and underbanked individuals. However, the RBI's decision to revoke its licence due to non-compliance with certain regulations posed a significant threat to Paytm's core business – facilitating UPI payments.

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Third-party UPI lifeline: ensuring continuity for users

The NPCI's approval for Paytm to operate as a third-party UPI app comes as a major relief for both Paytm and its vast user base. Here's how this development benefits various stakeholders:

  • Paytm Users: Millions of Paytm users who rely on the platform for daily transactions like bill payments, money transfers, and online shopping can breathe a sigh of relief. The continuity of UPI services ensures a seamless payment experience.
  • Fintech Industry: This move reinforces the robustness of the UPI ecosystem, demonstrating the NPCI's commitment to providing alternative solutions for payment service providers facing regulatory hurdles.
  • Financial Inclusion: The continued availability of UPI payments on Paytm upholds the cause of financial inclusion by ensuring continued access to digital payment services for a large segment of the population.

The road ahead

While Paytm's third-party UPI status offers continuity, some changes are likely:

  • Partner Banks: Paytm will collaborate with multiple partner banks to facilitate UPI transactions. Users might need to migrate their existing accounts or link new bank accounts to the app.
  • Focus on Transparency: Regaining user trust after the banking licence revocation will be crucial. Paytm must prioritise transparency and ensure a smooth transition for its user base.
  • Increased Competition: The third-party UPI space is already crowded with established players. Paytm will need to innovate and offer value-added services to retain its user base.


Paytm's approval as a third-party UPI app marks a new chapter for the company. While challenges remain, this development ensures continued access to UPI payments for millions of users. The coming months will be crucial as Paytm navigates the new landscape, builds trust with its user base, and adapts its strategy in a competitive environment. This episode also highlights the evolving regulatory landscape of India's fintech sector, emphasising the need for compliance and innovation for sustained growth. The news also favoured the company and people with Paytm on their stock investment radar.