The Reserve Bank of India has stopped the onboarding of online merchants by Paytm Payments Services Ltd (PPSL), a subsidiary of One97 Communications Ltd (OCL), and asked it to reapply for a payment aggregators licence.
OCL, however, said the development will not have any material impact on its business.
The company had proposed to transfer the payment aggregator (PA) services business undertaken by it to PPSL in December 2020 to comply with the guidelines of the banking regulator. However, the RBI had rejected its application. The company had re-submitted the required documents in September 2021.
In a regulatory filing, Paytm on Saturday said that PPSL has now received a letter from the RBI in response to the application for the authorisation to provide PA services for online merchants.
According to the letter, PPSL is required to seek necessary approval for past downward investment from the company into PPSL to comply with FDI guidelines and stop onboarding new online merchants for now. Paytm can resubmit the PA application within 120 calendar days.
PAs are entities that help e-commerce sites and merchants to accept various payment instruments from customers for completion of their payment obligations without the need for merchants to create a separate payment integration system of their own.