The Reserve Bank of India has turned down the application of Paytm Payments Services Limited to be allowed to operate as a payment aggregation within the country, according to a regulatory filing. The central bank has asked PPSL to submit its PA services application within 120 calendar days. Four months. It is noted that One 97 Communications OCL, which owns Paytm, proposed to transfer the payment aggregation services business in December 2020 to Paytm Payments Services PPSL in order to comply with the Payment aggregation PA guidelines of the Reserve Bank of India RBI. The fintech company submitted the required documents in September 2021. The RBI responded to the application.
To comply with the country's foreign direct investment FDI guidelines, the fintech company will need to have approval for past downward investment from One 97 Communications Ltd OCL into PPSL. The fintech company will not onboard new online merchants until the approvals are cleared.
The RBI has not rejected our application, but has just asked us to apply again in 120 days. We are hopeful that we will get the required approvals soon, because we are taking all the necessary steps. The communication from RBI is only applicable to onboarding new online merchants, and the company clarified that RBI hasn't noted any other material observations. We can continue to offer new offline merchants payment services, including all-in-one QR, Soundbox, card machines, according to PPSL s statement.
The payment aggregator framework was introduced in March 2020, which mandates only RBI-approved firms can offer payment services to merchants. A single entity cannot provide an e-commerce marketplace, along with payment aggregation services, according to the PAs guidelines of the RBI. Payment aggregation services must be separated from the e-commerce marketplace business.
A payment aggregation offers various payment services to merchants and e-commerce sites by a bunch of payment instruments from customers. With such payment aggregation services, merchants don't need to create a separate payment integration system. Transactions by cash and cheque, online and offline touchpoints, and others are provided under this service.
The RBI said that non-bank companies offering PA services should apply for authorisation, which is granted after required applications are verified by the central bank by June 30, 2021. MobiKwik's application was rejected by the RBI earlier in the day. In October of this year, it was reported that it had applied for the licence of Zaakpay.