One97 Communications, the parent company of Paytm Payment Services Ltd (PPSL), has received an extension from the Reserve Bank of India (RBI) to resubmit its application for a payment aggregator license. This allows Paytm to continue its payment aggregation operations while waiting for government approval regarding past investments made by One97 Communications.
However, the RBI mandates that all payment aggregators must be authorized, and when Paytm receives approval, it must apply for a payment aggregator license within 15 days. If the Indian government makes an unfavorable decision, the central bank must be notified immediately.
Despite this, Paytm has stated that the extension has had no material impact on its business and revenues since the communication from the RBI only applies to onboarding new online merchants. Paytm can continue to provide payment services to its existing online merchants, and One97 Communications can continue to onboard new merchants and offer them payment services for offline business, including All-in-One QR, Soundbox, Card Machines, etc.
According to recent filings with the Securities and Exchange Board of India, Paytm has witnessed a rise in the deployment of subscription-based products like sound boxes and point-of-sale (PoS) machines. As of February, Paytm has 6.4 million merchants who subscribe to the company’s products and services.
Paytm’s subscription-as-a-service model has proven successful in driving subscription revenues and higher payment volumes while increasing the funnel for merchant loan distribution.
While Paytm awaits government approval regarding past investments made by One97 Communications, the company can continue to operate its payment aggregation services without a significant impact on its business and revenues.