Update on PA License: Paytm Payments Services to Resubmit Application to RBI & Remains Hopeful of Getting Necessary Approvals

Our association with leading online merchants remains unimpacted, services to continue as it is

We would like to share that our 100% subsidiary, Paytm Payment Services Limited (“PPSL”) has received a letter from RBI in response to an application from PPSL for the authorization to provide payment aggregator and payment gateway services (“PA/PG”) for online merchants. We would like to emphasise that this not a rejection of our application by the RBI as the central bank has directed us to reapply in 120 days. We are taking all necessary steps & are hopeful of getting the required approvals soon.

You can also access our exchange filing here: https://www.bseindia.com/xml-data/corpfiling/AttachLive/be4fae6e-e497-4d02-8ec8-b5d460bc2e2c.pdf

As per the letter, PPSL is required to take the following steps and resubmit the PA application within 120 calendar days:

1. Seek necessary approval for past downward investment from the Company in to PPSL, to comply with FDI Guidelines

2. Not onboard new online merchants

There are no material observations other than what is mentioned above. Here we want to highlight that this has no material impact on our business and revenues as we will continue to service our existing online merchants. We can continue to onboard new offline merchants and offer them payment services including All-in-One QR, Soundbox, Card Machines, etc.

We are one of the biggest player in the online payments business in India. We are hopeful of receiving the necessary approvals in a timely manner and resubmitting the application. Our large existing clients base, from the biggest Indian e-commerce company to the largest ride hailing organization – all of whom will remain unimpacted with this. We can continue to work with banks for payment gateway services.

We want to reiterate to our customers, partners and shareholders that we are committed to staying a truly compliant organisation, and remain aligned to our business growth and profitability goals

FAQs

What is the RBI letter about?

The communication from RBI is regarding our wholly-owned subsidiary Paytm Payments Services Limited application for the authorization to provide payment aggregator services (“PA application”) for online merchants.

Has your payment aggregator license been rejected?

No, the RBI has not rejected our application. It has shared it’s observations mentioned above and have asked us to reapply in 120 days.

What does PPSL have to do to resubmit the application?

PPSL is required to seek necessary approval for past downward investment from OCL into PPSL, to comply with FDI Guidelines.

Will you be resubmitting the application?

Yes, PPSL will take all necessary steps to resubmit the application and we are hopeful of receiving the necessary approvals in a timely manner.

What happens to your payments business?

With our existing merchants, it continues to remain business as usual.

What happens during the next 120 days?

PPSL cannot onboard new online merchants. PPSL can continue to do business with existing online merchants, for whom the services will remain unaffected. We will also continue to onboard new offline merchants and offer them payment services including All-in-One QR, Soundbox, Card Machines, etc.

So what happens to current Paytm Payment Gateway clients?

As mentioned above, there will be no impact on current Paytm Payment Gateway clients. We have a huge market share in the online payments business in India. Our large existing clients base, from the biggest Indian e-commerce company to the largest ride hailing organization – all of whom will remain unimpacted with this.

Does this also mean you can’t onboard new offline merchants?

Absolutely not. We can continue to onboard new offline merchants and also offer them our payment services including All-in-One QR, Soundbox, Card Machines, etc.

How does this impact Paytm’s revenue?

There are no material observations other than what is mentioned above. This has no material impact on our business and revenues, since the communication from RBI is applicable only to onboarding of new online merchants.
On a QoQ basis, our revenue increased by 12% primarily due to revenue growth in payment gateway business from higher GMV in online merchants (which remains the same even now), particularly e-commerce and growth in the number of device subscriptions (which drives both subscription revenues and MDR revenues).