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Reserve Bank gave a big blow to Paytm, banned this work

The Reserve Bank of India (RBI) has given a blow to Paytm Payments Services Limited (PPSL). The central bank has said that Paytm will have to submit the application again to work as a payment aggregator. Reserve Bank has put a stop to the online merchant onboarding of Paytm Payments Services. The Company will not on-board a new online merchant until the application is approved. However, the company says that this decision of the Reserve Bank is not going to have any major impact on its business. This news has come at a time when heavy selling is being seen in the shares of Paytm.

How does a payment aggregator work?

Paytm Payment Service had applied for a license to provide payment aggregator services to online merchants, which has been rejected by the Reserve Bank. A payment aggregator is a service provider that provides all types of payment options at one place. Then after collecting the money from the customers, the payment is sent to the merchant at a fixed time. Understand in simple words, the job of a payment aggregator is to receive payments from customers through all payment options and transfer them to shopkeepers and e-commerce sites within a specified time.

Application has to be made within 120 days

Now Paytm has to submit application for payment aggregator again within 120 calendar days. Paytm says that existing merchants on its platform will not be affected in any way. The company says that the effect of the Reserve Bank’s decision will be seen only on the new online merchant. The company has expressed hope that after applying again, it will get approval.

How many companies have applied?

In the year 2020, by issuing guidelines, the Reserve Bank had made the license mandatory for all payment aggregators. Since then many payment companies have applied for the license. According to the report, so far more than 185 fintech companies and startups have applied for the license.

Paytm shares

Shares of Paytm closed at a gain of more than five per cent on Friday. The stock, which reached an all-time low level of Rs 439.60 in the previous session, jumped on the previous day. However, Paytm shares have lost more than 20 per cent in the last six months.

At the same time, Paytm’s stock has lost more than 75 percent from its high. The IPO of One 97 Communications Limited, the parent company of Paytm, was launched in November last year. The issue size of Paytm IPO was Rs 18,300 crore and for this the price band was fixed from Rs 2080 to Rs 2150.