Third Party Application Providers In India

Context: 

The Reserve Bank of India (RBI) has asked the National Payment Council of India (NPCI)  to become a Third-Party Application Provider (TPAP) for continued Unified Payments Interface (UPI) operation of the Paytm application.

What is TPAP? – Third Party Application Provider

• Third Party Application Provider (TPAP) is an entity that provides UPI-compliant apps to users for making payments.
• These apps can include mobile wallets, merchant apps, or any platform that uses UPI.
  • NPCI, which manages retail payment systems in India, owns and runs the UPI platform.
• TPAPs use NPCI’s UPI infrastructure and collaborate with payment service providers (PSPs) and banks to process transactions.
• TPAPs are responsible for ensuring their apps meet NPCI’s security standards and compliance guidelines.

Current Number of Third Party Application Providers

• Right now, there are 22 third-party apps approved by NPCI for Unified Payments Interface (UPI) transactions.
• These apps allow users to send and receive money using UPI IDs.
• Some of these approved apps are Amazon Pay, Google Pay, Groww, Jupiter Money, Mobikwik, Phonepe, Samsung Pay, TataNeu, and Whatsapp.

Reason for RBI’s Asking NPCI  to Examine Paytm’s Third Party Application Provider Request

• Paytm Bank Closure:

• • The RBI has mandated that Paytm Payments Bank (PPBL) cannot accept further credits into customer accounts and wallets. 
  • Existing Paytm UPI transactions were routed through PPBL which will be ceased now. 
    • Paytm Payments Bank (PPBL)is an associate company of OCL and  is registered as TPAP.

• Paytm’s Demand for Third Party Application Provider Status:

• • One97 Communication Ltd (OCL), the parent company of Paytm, sought TPAP status for its UPI operations.
  • TPAP approval is essential for Paytm to continue providing UPI-based payment services for ensuring easy digital payments for users of UPI

• Seamless Migration:

  • If NPCI grants TPAP status to OCL, ‘@paytm’ UPI handles need to be seamlessly migrated from PPBL to a set of newly identified banks.
  • The new banks must have the capability to process high-volume UPI transactions.
• Inconvenience in Transactions: The closure of operation of PPBL will create chaos as there are various customers who rely on paytm app for UPI payment services.

Benefits to Users

• Continuity of Services:

  • Seamless UPI Operations: If Paytm receives TPAP approval, it will ensure uninterrupted UPI services for Paytm users.
  • No Disruptions: Despite the closure of Paytm Payments Bank (PPBL), users can continue using Paytm for UPI transactions.

• Expanded Banking Options:

  • Multiple Banks: With TPAP status, Paytm users’ UPI accounts will be migrated to a set of newly identified banks.
  • Choice and Accessibility: Users will have access to a wider range of banks for their UPI transactions.

• Enhanced User Experience:

  • Smooth Transition: Paytm’s efforts to migrate UPI handles seamlessly will minimize inconvenience for users.
  • Familiarity: Users can continue using their existing ‘@paytm’ UPI handles without major disruptions.

• Compliance and Stability:

  • Regulatory Compliance: The RBI’s directive ensures adherence to UPI norms and regulatory requirements.
  • Financial Stability: Users can trust that their digital payments remain secure and compliant.

• Economic Inclusion:

  • Broadened Access: TPAP approval allows Paytm to serve a diverse user base, including those who rely on UPI for financial inclusion.
  • Financial Empowerment: Users, especially in rural areas, can continue using Paytm for essential transactions.

News Source: Indianexpress

DOWNLOAD PDF