India's Paytm wins an important regulatory case just after a big investor exit
The fintech can now handle transactions directly for merchants across cards, net banking, and UPI.
Since 2022, Paytm’s payment aggregator ambitions have been stuck at the same traffic light, red. The stop came in November 2022 when the Reserve Bank of India (RBI) denied it a licence, citing rules around foreign investment from countries sharing a land border.
Without it, Paytm couldn’t onboard new online merchants, a blow that may not have sunk revenues but did clip its reach.
This week, that light finally turned green. The RBI has given “in-principle” approval for Paytm to operate as an online payment aggregator, a move that lets it handle transactions directly for merchants across cards, net banking, and UPI. In simple terms, it regains control over a part of its business it had to outsource to partner banks like Axis, HDFC, SBI, and Yes Bank after earlier restrictions.
Could be convenient timing or not, the approval came just a week after Ant Group, a Chinese investor, sold its remaining 5.8% stake in Paytm, following an earlier, larger exit last year. It’s hard to ignore how this clean break may have helped ease regulatory concerns that once stood in the way.
Emmanuel Oyedeji
In India’s hyper-competitive UPI space, Paytm sits in third place, well behind PhonePe and Google Pay, which together handle over 80% of transactions.
In June, Paytm’s share was just under 7% of UPI volumes, according to the National Payments Corporation of India (NPCI). The new licence won’t suddenly vault it to the top, but it does give the company more independence in shaping its online merchant services without leaning heavily on external partners.
There’s still a to-do list, though. The RBI has made the approval conditional on Paytm completing a system audit, including a cybersecurity review, within six months. Miss that deadline, and the licence disappears. And the scope is limited to online payments, offline services like Paytm’s sound boxes stay untouched for now.
On the numbers side, Paytm has shown signs of a turnaround, posting an income of $14 million in the first quarter of FY26 and its share price has climbed over 13% this year, as per reports. But in fintech, profits can be fleeting, and the competition never sleeps.
At least for today, Paytm can breathe easier, as one regulatory cloud has been cleared, and in a business where trust and compliance matter as much as speed and scale, that’s not a small win.
Louis Eriakha
