Fintech giant Paytm has announced its strategic decision to transfer its point of sale (PoS) terminals to RBL Bank, aiming to streamline transaction processing and enhance customer experience. Under this arrangement, while Paytm retains operational control, RBL Bank will handle transaction processing, marking a significant collaboration in the digital payment ecosystem.
According to ET, “One 97 Communications, the parent company of Paytm, will retain responsibility for operating and managing these terminals under the Paytm brand, the transaction processing will now be handled by RBL Bank.”
In technical parlance, this transition involves routing transactions through RBL Bank’s ‘bin’, encompassing Visa, Mastercard, or RuPay card transactions conducted at Paytm’s PoS terminals.
Furthermore, transactions will be channeled through Axis Bank’s nodal accounts for eventual settlement with merchants. Paytm may explore establishing nodal accounts with additional banks in the future, thereby augmenting its operational flexibility.
Addressing regulatory directives, Paytm recently shifted its nodal account for Paytm Payments Bank to Axis Bank. The move came in response to RBI directives that restrained Paytm Payments Bank from undertaking certain transactions post-February 29, subsequently extended to March 15.
Commenting on the development, Paytm emphasized the seamless continuity of merchant settlements, stating, “The new arrangement has been executed by opening an escrow account with the private bank to ensure merchant settlements continue without a hitch.”
In a recent milestone, One97 Communications secured the Third-Party Application Provider (TPAP) license from the National Payments Corporation of India (NPCI), enabling it to operate UPI services under a multi-bank model. Major banks including Axis Bank, HDFC Bank, State Bank of India, and Yes Bank are set to collaborate as payment system provider (PSP) banks to One 97 Communications.
Despite these strategic maneuvers, Paytm has encountered market turbulence, with shares witnessing a significant downturn of nearly 60% following the RBI’s regulatory actions. Furthermore, six mutual funds have divested their holdings in Paytm’s parent company, reflecting a shift in investor sentiment amidst regulatory adjustments.
The company remains optimistic about its future prospects, leveraging partnerships and regulatory compliance to navigate evolving market dynamics and sustain its leadership in India’s digital payment landscape.
