Four banks compete to acquire Paytm merchants: Check here
What's the story
Axis Bank, Canara Bank, Yes Bank, and Kotak Mahindra Bank are the leading contenders to take over merchant accounts of Paytm Payments Bank Ltd (PPBL). Approximately three crore merchants currently use mobile payments firm Paytm which is operated by One97 Communications Limited (OCL). The Reserve Bank of India (RBI) has permitted OCL merchants and Unified Payments Interface (UPI) users to keep using their handles, QR codes, and point-of-sale machines even after restrictions on PPBL come into effect on March 15.
Expenses
Annual expenses for transaction processing
The banks expect an annual expenditure of around Rs. 50-70 crore to manage and process the billions of transactions. The exact cost will depend on factors such as which banks take over what type of merchants, and the number of transactions below Rs. 2,000. A senior executive involved in the discussions informed Moneycontrol that documentation is underway, with different discussions at various stages.
Agreements
Finalization of commercial terms still underway
The commercial terms for the takeover are yet to be finalized. While Axis Bank and Canara have quoted lowest expenses, Kotak and Yes Bank have quoted far higher expenses. The discussions are expected to conclude this week, ahead of the March 15 deadline. The revenue earned from merchants will be distributed between OCL and the banks, according to a banking source aware of the discussions.
Compulsions
RBI restrictions force PPBL to seek bank partnerships
Following the RBI's restrictions on PPBL, the company has been compelled to seek alliances to maintain its UPI business. The central bank has instructed PPBL to cease all banking services, except for the withdrawal of remaining funds in accounts. As a result, all Paytm UPI accounts need to be migrated to different banks. On February 23, RBI asked NPCI to ensure the migration of @paytm payment handles seamlessly to three or four commercial banks.