“Paytm Collaborates with Axis Bank for Merchant Transaction Settlement Amid RBI Scrutiny of Payments Bank”
In response to the ongoing regulatory crackdown against Paytm Payments Bank, Paytm has forged a strategic partnership with Axis Bank to ensure the smooth settlement of merchant transactions.
In response to the ongoing regulatory crackdown against Paytm Payments Bank, Paytm has forged a strategic partnership with Axis Bank to ensure the smooth settlement of merchant transactions.
Facing a crisis within Paytm Payments Bank, fintech giant Paytm, owned by One97 Communications, has taken proactive steps by finalizing a partnership deal with Axis Bank. This move aims to facilitate uninterrupted settlement of merchant transactions, crucial for the seamless operation of Paytm’s services.
The decision to shift the nodal account from Paytm Payments Bank to Axis Bank was made in light of the Reserve Bank of India’s (RBI) directive, which advised all merchants and customers to transition their accounts away from Paytm Payments Bank before the looming deadline of March 15.
As per a regulatory filing by Paytm, this partnership with Axis Bank ensures the continuation of essential services such as Paytm QR, Soundbox, and card machine operations beyond the RBI’s deadline. By transitioning to Axis Bank, Paytm aims to maintain its operational efficiency and uphold its commitment to serving merchants and customers seamlessly.
Explaining the transition, Paytm stated in its regulatory filing, “The company has also shifted its nodal account to Axis Bank (by opening an escrow account) to continue seamless merchant settlements as before.” It further emphasized that this arrangement is poised to seamlessly replace the previous nodal account used with Paytm Payments Bank.
Notably, the nodal account serves as Paytm’s master account, responsible for the settlement of all transactions conducted by customers and merchants. The RBI’s recent directive clarified that services such as Paytm QR code, Soundbox, or POS terminals will remain functional post-March 15, provided they are linked to alternative banks instead of PPBL.
This strategic move by Paytm comes in the wake of concerns raised by the Financial Intelligence Unit (FIU) regarding KYC irregularities in thousands of accounts associated with Paytm Payments Bank, highlighting potential money laundering risks.
Meanwhile, the RBI has extended the deadline for customers and merchants to transition their accounts from Paytm Payments Bank to other banks by March 15. This extension grants additional time for stakeholders to execute the necessary account transfers. Additionally, the RBI assured that customers will have continued access to their balances and associated services even after the deadline, without any restrictions.
Following the March 15 deadline, transactions and deposits into Paytm Payments Bank accounts will be suspended, in line with regulatory directives aimed at safeguarding customer interests and ensuring compliance within the banking sector.
Sources By Agencies
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