Big blow to Paytm! RBI rejected the application for a payment aggregator license, what will be the effect?
Apart from Paytm, RBI has rejected only MobiKwik’s application. At the same time, regulatory permission has been given to Razorpay, Pine Labs, and CCAvenues.
RBI rejects Paytm’s payment aggregate application.
⏩ Paytm was asked to reapply within 120 calendar days.
⏩ The company has said that this decision will not affect offline merchants.
⏩ Paytm will not be able to add new online merchants till permission is granted.
New Delhi. The Reserve Bank of India has rejected the application made by Paytm Payment Service (PSSL) for obtaining a payment aggregator license. This can be considered a big blow to the expansion plan of the company. This application was made by Paytm Payments Services Limited, a subsidiary of Paytm. On November 26, the company gave this information to the stock markets. Apart from Paytm, RBI has rejected only MobiKwik’s application.
At the same time, regulatory permission has been given to Razorpay, Pine Labs, and CCAvenues. Apart from this, Billdesk and PayU are still waiting for permission. Please tell that RBI has given 120 calendar days to Paytm for reapplying. Significantly, Paytm is seeking permission to become a payment aggregator for online merchants.
What did Paytm say?
Paytm said in the information given to BSE, “This has not affected our business and revenue. This order of RBI is applicable only on adding 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.” The company has also expressed the possibility of getting permission ahead of time.
What should Paytm do?
The company will have to obtain the necessary approval for downward investment from Paytm in PPSL to comply with the RBI guidelines. This order has been given to fulfill the foreign direct investment (FDI) instructions of the government. Apart from this, at present Paytm will not be able to add new online merchants with it.
What is a payment aggregator and why the license is necessary?
Payment aggregator collects money from customers through different means in one place. This is called a pool. After this, this amount is transferred to the merchant’s account. Due to this, the merchant does not have to deal with different payment methods. This work is done by the payment aggregator. In March 2020, RBI made it mandatory that all payment aggregators would be authorized by it. Non-financial institutions were asked to apply for obtaining payment aggregator licenses by 30 June 2021. After this, this date was extended to 30 September 2021.