Paytm Payments Services gets RBI nod to operate as payment aggregator

Paytm Payments Services Limited (PPSL), a wholly-owned subsidiary of One 97 Communications Ltd (Paytm), has received in-principle authorisation from the Reserve Bank of India (RBI) to operate as an online payment aggregator under the Payment and Settlement Systems Act, 2007. The authorisation was communicated via an official RBI letter dated 12 August 2025 and disclosed through filings with the stock exchanges.

This development marks a significant milestone for Paytm, following the RBI's earlier rejection of PPSL’s application for a payment aggregator licence in November 2022. At the time, the central bank had instructed the company to reapply in compliance with foreign direct investment (FDI) regulations. With this in-principle approval, previous restrictions, particularly the prohibition on onboarding new merchants, have now been lifted.

The letter stated, "Paytm Payments Services Limited (PPSL), a wholly-owned subsidiary of One 97 Communications Limited (OCL or the Company), has received in-principle authorisation from the Reserve Bank of India (RBI), via its letter dated 12 August 2025, to operate as an Online Payment Aggregator under the Payment and Settlement Systems Act, 2007."

The RBI’s approval came just weeks after Chinese conglomerate Alibaba Group completed its exit from One 97 Communications by divesting its remaining stake, signalling a clean break from the company.

However, the RBI has clarified that the in-principle authorisation is strictly limited to online payment aggregator operations as defined under the PA-PG Guidelines. Other payment services that fall outside the scope of these guidelines are not covered. The RBI’s communication emphasised, "It should be noted that this in-principle authorisation only covers online PA operations as defined in the PA-PG Guidelines. Transactions not falling under the ambit of these guidelines, including pay-out transactions undertaken on behalf of merchants, must not be routed through the escrow account designated for PA operations."

After nearly three years of regulatory uncertainty, this approval allows Paytm to strengthen its digital payments ecosystem and recommence merchant onboarding.

Nonetheless, the authorisation is subject to certain regulatory conditions. PPSL must complete a system audit, including a cybersecurity assessment, and submit the audit report within six months. Failure to do so will result in the expiry of the in-principle authorisation and the denial of final approval.

Furthermore, PPSL is required to obtain prior approval from the RBI in the event of any change in shareholding, acquisition of control, or transfer of the payment system, in line with the central bank’s guidelines for non-bank payment system operators.