After an 8-month ban, Paytm has received approval from the National Payments Corporation of India (NPCI) to add new users to its Unified Payments Interface (UPI) platform. The approval was given on October 22, 2024, after Paytm complied with several regulatory guidelines. According to Paytm’s BSE filing, the company will have to strictly follow NPCI guidelines, which include guidelines related to risk management, app branding and customer data. The approval comes as a relief to Paytm, which was unable to add new UPI users since early 2024 due to regulatory issues.

Why was Paytm banned?

The root cause of Paytm’s inability to onboard new UPI users began in January 2024. The Reserve Bank of India (RBI) issued instructions citing reasons for non-compliance of certain operational guidelines. Notably, this ban was imposed due to concerns over Paytm’s management of risk-related processes and compliance with data protection regulations. Reports indicate that Paytm had problems with the storage of customer payment data and did not fully comply with certain risk management practices mandated by regulatory authorities.

The move affected the company’s ability to expand its UPI user base, which was crucial in the growing digital payments sector. During the ban, Paytm had to focus on addressing these issues, working closely with regulatory bodies to meet the required standards.

What impact did the ban have on Paytm?

Paytm’s inability to grow its user base led to a sharp decline in its market share in UPI transactions. Before the ban, Paytm had 13 percent share in UPI payments. However, due to lack of new users its market share dropped to 8 percent. During this period, competitors like Walmart-owned PhonePe and Google Pay strengthened their hold on the UPI market. Together, these two players now process about 87 percent of UPI transactions in India, leaving Paytm with a much smaller share of the pie.

What’s next for Paytm?

Now that the ban has been lifted, Paytm is expected to regain momentum in the UPI space. However, the approval comes with strict conditions, and Paytm will have to closely follow NPCI guidelines, such as ensuring better risk management, complying with customer data protection laws and working under a multi-bank setup for its UPI transactions. to do.

The lifting of the ban marks an important moment for Paytm, which will be keen to regain lost ground in India’s rapidly growing digital payments landscape. Although it may take time for Paytm to completely catch up with competitors, the NPCI approval is a positive sign, providing the company with a fresh opportunity to grow its UPI user base once again.