Paytm will apply once again for a payment aggregator license after its previous bid was rejected, the company said in a stock exchange filing on Saturday.
“Our 100% subsidiary, Paytm Payments Services Limited, is in receipt of a letter from [the] Reserve Bank of India in response to an application from PPSL for the authorization to provide payment aggregator services for online merchants,” the company said.
Paytm Payment Service Limited
One97 Communications (OCL), which owns the Paytm brand, had proposed to transfer the payment aggregator services business undertaken by it to Paytm Payments Services (PPSL) in December 2020 to comply with payment aggregator (PA) guidelines of the Reserve Bank of India (RBI) but the banking regulator had rejected its application.
This makes Paytm the only large payment gateway player to receive a rejection from the regulator. Incumbents like Razorpay, Pine Labs, Cashfree and CCAvenues have received an in-principle nod from the regulator, while BillDesk and PayU are awaiting a response.
Mobikwik is the only other known player, besides other smaller players, whose application was rejected by the RBI as the company failed to meet networth requirements. The company has already reapplied for the license, as per reports.
Reapply for Payment Aggregator License
The company had re-submitted the required documents in September 2021.
As per the letter, PPSL is required to take the following steps and resubmit the PA application within 120 calendar days:
- Seek necessary approval for past downward investment from the Company in to PPSL, to comply with FDI Guidelines
- Not onboard new online merchants
There are no material observations other than what is mentioned above. This has no material impact on our business and revenues, since the communication from RBI is applicable only to onboarding of new online merchants.
“We can continue to onboard new offline merchants and offer them payment services, including All-in-One QR, Soundbox, Card Machines, etc. Similarly, PPSL can continue to do business with existing online merchants for whom the services will remain unaffected,” said the company in its exchange filing.
According to RBI’s PAs guidelines, a single entity cannot continue to provide an e-commerce marketplace along with payment aggregator services and such payment aggregator services must be separated from the e-commerce marketplace business.