Paytm Payments Services gets RBI nod to operate as online payment aggregator

Paytm Payments Services Limited (PPSL), a wholly-owned subsidiary of One 97 Communications Limited, has received in-principle approval from the Reserve Bank of India (RBI) to operate as an online payment aggregator under the Payment and Settlement Systems Act, 2007.

This authorisation follows PPSL’s re-application for the licence in September 2024, after its initial application was returned by the RBI in November 2022. The licence will enable Paytm to onboard new online merchants, increase payment transaction volumes, and boost revenue, while eliminating regulatory uncertainties and strengthening its position in the digital payments sector.

“Paytm Payments Services Limited (PPSL), a wholly-owned subsidiary of One 97 Communications Limited (OCL or the Company), for a Payment Aggregator (PA) licence. We would like to inform you that Reserve Bank of India (RBI) has granted in-principle’ authorisation to PPSL vide its letter…dated August 12, 2025, to operate as an Online Payment Aggregator under the Payment and Settlement Systems Act, 2007,” the filing said.

According to the RBI’s communication, PPSL must comply with the guidelines for payment aggregators and gateways issued in March 2020, along with any subsequent clarifications.

The central bank clarified that the in-principle authorization granted to Paytm Payments Services applies exclusively to payment aggregator (PA) operations as outlined in the RBI’s Guidelines on Regulation of Payment Aggregators and Payment Gateways.

It further emphasized that transactions outside the scope of the PA-PG guidelines—such as payout transactions conducted on behalf of merchants—are not permitted to be processed through escrow accounts designated for PA activities.

As part of the conditions, the RBI has instructed PPSL to conduct a comprehensive system audit, including a cybersecurity assessment, to be performed by an auditor empanelled with CERT-In, a Certified Information Systems Auditor (CISA) registered with ISACA, or a professional holding the DISA qualification from the Institute of Chartered Accountants of India.

The audit must evaluate compliance with the Master Direction on Cyber Resilience and Digital Payment Security Controls for non-bank payment system operators issued on July 30, 2024, as well as the RBI’s data storage circular for payment systems dated April 6, 2018.

PPSL is required to submit the system audit report within six months from the date of the RBI’s letter. Paytm has stated that failure to meet this deadline will lead to the automatic expiry of the in-principle authorization, and the final approval will not be granted.

Additionally, the RBI has advised PPSL to adhere to the guidelines issued on July 4, 2022, which mandate obtaining prior approval for any changes in shareholding, acquisition of control, or transfer of payment system operations for non-bank payment system providers.

Payment services business

In August 2024, Paytm Payments Services received approval from the Ministry of Finance to increase its investment in its payment services business. In an official filing last year, Paytm stated, “PPSL has received approval from the Government of India, Ministry of Finance, Department of Financial Services, via its letter dated August 27, 2024, for downstream investment from the company into PPSL.”

This approval enabled PPSL to proceed with resubmitting its payment aggregator (PA) licence application to the RBI. Although the initial PA licence application was rejected in November 2022 due to non-compliance with Press Note 3, the company has remained dedicated to obtaining the licence.

The RBI had earlier rejected Paytm’s application for a payment aggregator (PA) licence due to non-compliance with foreign direct investment (FDI) norms specified in Press Note 3. The regulator also directed Paytm to address these issues before submitting a fresh application.

Over the past few years, One 97 Communications, Paytm’s parent company, has been under increased regulatory scrutiny. In January, the RBI instructed Paytm Payments Bank to pause onboarding new customers amid concerns about its adherence to banking regulations. Additionally, the company has attracted the attention of India’s financial crime investigation authorities.

This development coincides with Paytm’s recent quarterly results, where the company reported a 28% year-on-year rise in revenue from operations, reaching Rs 1,918 crore in Q1 FY26 compared to Rs 1,501 crore in Q1 FY25. Paytm also posted a net profit of Rs 123 crore in Q1 FY26, a significant turnaround from a net loss of Rs 840 crore in the same quarter last year.