Paytm secures key regulatory win after investor exit
▼ Summary
– Paytm received RBI approval to operate as an online payment aggregator, marking a regulatory breakthrough after previous denials due to noncompliance with investment rules.
– The license allows Paytm to onboard new online merchants and offer various payment methods, lifting restrictions imposed in 2022.
– The approval follows Ant Group’s recent exit from Paytm by selling its remaining 5.8% stake, continuing its earlier divestment in 2023.
– Paytm must complete a system audit, including cybersecurity, within six months to maintain the license, which is limited to online payment services.
– Despite trailing PhonePe and Google Pay in UPI transactions, Paytm reported a net income of $14 million in Q1 2026, showing financial recovery and improved market confidence.
Paytm has achieved a significant regulatory milestone by securing approval from India’s central bank to operate as an online payment aggregator, marking a turning point for the fintech giant after facing months of scrutiny and investor exits. The Reserve Bank of India (RBI) granted in-principle authorization to Paytm’s Payment Services unit, allowing it to onboard new online merchants and process digital transactions, a capability it had lost in 2022 due to compliance issues.
The approval arrives shortly after Ant Group, Paytm’s former Chinese investor, sold its remaining 5.8% stake in parent company One97 Communications for $454 million. This follows an earlier divestment in 2023, reducing Ant’s influence as Paytm worked to align with India’s foreign investment rules. The regulatory green light enables Paytm to offer card payments, net banking, and Unified Payments Interface (UPI)None services directly to online businesses, eliminating previous restrictions.
To maintain its license, Paytm must complete a system audit and cybersecurity review within six months. Failure to comply could result in the approval being revoked. The authorization is currently limited to online transactions, excluding other financial services.
The development strengthens Paytm’s position in India’s competitive digital payments landscape, where it ranks third behind PhonePe and Google Pay in UPI transactions. Despite processing just 6.9% of June’s 18.4 billion UPI transactions, Paytm has diversified its offerings with offline payment solutions, credit services, and lending products to attract merchants and users.
Financially, the company has shown resilience, reporting a net profit of ₹1.23 billion ($14 million) for Q1 FY26, a sharp rebound from losses a year earlier. Revenue grew 28% year-over-year to $224 million, while its contribution margin improved to 60%. Paytm’s stock has also gained 13.25% year-to-date, reflecting renewed investor confidence after regulatory hurdles.
By reducing reliance on banking partners and expanding its payment ecosystem, Paytm aims to consolidate its presence in India’s rapidly evolving fintech sector. The RBI’s approval could pave the way for further growth as the company seeks to regain lost market share and stabilize its operations.
(Source: TechCrunch)
