Relief on the cards for Paytm customers? PhonePe, Google Pay type model being considered by Paytm to keep UPI running – Times of India

by The Technical Blogs



Relief on the cards for Paytm customers? Paytm is exploring the third-party payment app (TPAP) route to ensure uninterrupted access to the Unified Payments Interface (UPI) for its users, according to sources familiar with the matter.
Initial discussions on this initiative have commenced with the National Payments Corporation of India (NPCI), the organization overseeing the UPI ecosystem in the country, according to an ET report.
Presently, Paytm users making UPI payments have virtual payment addresses (VPAs) ending in @paytm. However, starting March 1, these addresses may transition to those associated with other banks.
Paytm intends to collaborate with three or more banks to issue new VPAs to its customers, beginning next month. HDFC Bank, Axis Bank, and Yes Bank are being considered to support both consumer-facing UPI payments and the nodal accounts of Paytm’s merchants.
Also Read | Worried about Paytm UPI & FASTag migration? RBI to meet NPCI, NHAI officials to rescue Paytm customers
The Reserve Bank of India directed Paytm Payments Bank on January 31 to halt all basic payment services, including UPI transactions, from February 29.
For merchant payments, banks may necessitate fresh know-your-customer (KYC) verification. However, consumers using Paytm for UPI can continue their service with a backend change in virtual payment addresses (VPAs), sources told the financial daily.
“Since Paytm Payments Bank will stop offering payment services, the Paytm app will become a third-party app going forward, integrating UPI through other lenders,” a source was quoted as saying.
Following this directive, Paytm will transition into a third-party app, integrating UPI through other banks, akin to platforms like PhonePe, Google Pay, and Amazon Pay.
Also Read | 20-30% higher salaries than industry standards! Why Paytm rivals are wary of hiring talent from troubled fintech firm
With 22 third-party payment app providers (TPAPs) operating on UPI, banks like Axis Bank, HDFC Bank, and ICICI Bank support multiple fintechs through this route, often using a blend of their brand names in payment addresses.
For example, Google employs ‘ok’ as a prefix derived from the phrase ‘OkGoogle’ in its bank name. Similarly, PhonePe’s virtual payment address (VPA) issued through Yes Bank utilizes ‘ybl’.
The backend process of changing payment addresses for customers can be executed remotely, unlike the front-end adjustments required for merchants’ payment acceptance infrastructure.
However, relying on third-party lenders for technology backend may pose challenges during high payment volumes.





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