Paytm wins RBI nod to restart merchant onboarding after nearly three years

The Reserve Bank of India has granted in-principle authorization to Paytm Payments Services Limited, a wholly owned subsidiary of One 97 Communications Ltd., to operate as an online payment aggregator under the Payment and Settlement Systems Act of 2007. The central bank conveyed the decision in a letter dated Aug. 12, 2025, disclosed in Paytm’s filings with the stock exchanges.

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The approval marks a reversal of fortune for Paytm, which in November 2022 saw its application for a payment aggregator license rejected over noncompliance with foreign direct investment rules. At the time, the regulator also barred the company from onboarding new merchants, restrictions that will now be lifted.

Per the letter, the authorization applies solely to online payment aggregator operations and does not extend to other payment activities.

"It should be noted that this in-principle authorisation only covers online PA operations as defined in PA-PG Guidelines and transactions which do not fall under the ambit of the said guidelines including 'pay-out transactions undertaken on behalf of merchants should not be routed through escrow account designated for PA operations," the central bank said.

The RBI also imposed conditions. Paytm Payments Services must conduct a system and cybersecurity audit within six months, or risk losing the in-principle authorization. The company must also comply with guidelines on securing prior approval for changes in shareholding, acquisition of control, or transfer of payment system operations.

The approval comes as Paytm is emerging from a turbulent stretch. In the April–June quarter of fiscal 2026, the company reported a consolidated net profit of 123 crore rupees, swinging from an 839 crore rupee loss a year earlier. It was the first operationally driven quarterly profit since the company’s listing.

The recovery follows a bruising period beginning in January 2024, when the RBI imposed curbs on Paytm Payments Bank, sharply reducing revenue for six months. Since then, the company has pared costs, sold non-core assets like Paytm Insider, and recalibrated its merchant lending operations.

In another shift, Chinese fintech giant Ant Financial has exited its stake entirely, selling the remaining 5.84 percent holding for about 3,800 crore rupees in block deals. The move eliminates Chinese ownership in Paytm, reshaping its shareholder profile.