Shares of One97 Communications Ltd, the parent company of digital payments giant Paytm, witnessed a significant 5% increase, reaching the upper circuit limit at INR 370.90, in the trading session on Friday, March 15. This positive market response came right after the National Payments Corporation of India (NPCI) granted Paytm the approval to operate as a Third-Party Application Provider (TPAP) in the UPI ecosystem.
Strategic Shift Ensures Seamless Transactions
This pivotal approval allows Paytm to conduct UPI services through a collaborative model with several major banks, including Axis Bank, HDFC Bank, State Bank of India, and Yes Bank, serving as payment system provider (PSP) banks. Notably, YES Bank will also take on the role of merchant acquiring bank for both existing and new UPI merchants associated with Paytm, ensuring a smooth transition and uninterrupted service for users and merchants alike.
Timely Compliance Ahead of RBI Deadline
The move comes just in time as the Reserve Bank of India’s (RBI) restrictions on Paytm Payments Bank Ltd (PPBL) were set to take effect on the same day. Previously reliant on PPBL for facilitating transactions, Paytm's proactive steps to align with other PSP banks underscore its commitment to uninterrupted service delivery and regulatory compliance.
Market Confidence Restored
Paytm's swift action to secure the TPAP license and adapt to RBI’s regulatory framework has evidently bolstered investor confidence, as reflected in the surge in share prices. The company’s strategic partnerships for nodal and merchant account management further solidify its operational resilience and long-term growth trajectory.
Future Outlook
With the NPCI’s endorsement and a renewed operational model, Paytm appears well-positioned to navigate the challenges posed by regulatory changes. This development not only reinforces Paytm's standing in the digital payments landscape but also signals a positive outlook for its financial performance and stakeholder confidence.
