One97 Communications (OCL), the parent company of Paytm, has embarked on a strategic collaboration with Axis Bank to facilitate merchant payments settlement, following regulatory directives.
Background: RBI Directive and Transition Decision
The Reserve Bank of India (RBI) mandated the termination of Paytm Payments Bank’s nodal account by February 29, citing persistent non-compliance and supervisory concerns. In response, OCL decided to transition its nodal account from Paytm Payments Bank to Axis Bank to ensure continuity and seamless settlements for merchants.
The objective of Transition: Ensuring Continuity
OCL aims to maintain smooth operations and balance flow for merchants through the transition to Axis Bank, as highlighted in an exchange filing. The move underscores the commitment to uninterrupted service provision.
Axis Bank Partnership: Reinforcing Confidence
Paytm Payment Services Ltd (PPSL), a wholly-owned subsidiary of OCL, has had a longstanding partnership with Axis Bank since its inception. Leveraging this existing collaboration adds confidence to the transition process, ensuring efficient financial transactions.
Support from Axis Bank: Facilitating Financial Flow
An official from Axis Bank emphasized that the partnership will facilitate the flow of money through the nodal account, reaffirming the commitment to efficient financial transactions and merchant settlements.
Extension of Deadline by RBI
While the RBI initially set February 29 as the deadline for terminating nodal accounts, it extended the deadline till March 15 for Paytm Payments Bank to cease new deposits or credit transactions. This extension provides additional time for regulatory compliance.
Impact on Merchants: Clarity from RBI
The RBI clarified through an FAQ that merchants utilizing Paytm’s services can continue accepting payments through various channels beyond March 15, provided their accounts are linked to banks other than Paytm Payments Bank. However, merchants linked to Paytm Payments Bank will only be eligible for refunds or cashback, with restrictions on other credit transactions.
The scale of Paytm’s Presence
According to Paytm’s earnings presentation, FY 2024, the company has gone down to 10.6 million soundboxes and point-of-sale devices in the market. This significant presence underscores Paytm’s dominance in the payment solutions sector, emphasizing its role in facilitating digital transactions.
Conclusion
In conclusion, the partnership between Paytm and Axis Bank signifies a strategic response to regulatory directives aimed at ensuring seamless merchant payment settlement. With a focus on continuity, compliance, and efficient financial transactions, the collaboration underscores the commitment to maintaining service excellence amidst evolving regulatory landscapes.
-Prisha Jaiswal