SBI Becomes Fourth Bank To Partner With Paytm For UPI Services: Report

SBI Teams Up With Paytm: State Bank of India, the biggest bank in the country, has reportedly partnered with Paytm, the popular app for payments, as its latest partner for handling consumer UPI transactions.

Previously, Paytm's UPI services were managed by Paytm Payments Bank Limited (PPBL). However, due to regulatory measures taken by the RBI against PPBL, Paytm has been compelled to seek partnerships with other banks to continue offering its services, similar to its rivals PhonePe and Google Pay.

Other bank partners with Paytm

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According to a report by the Economic Times, Paytm had previously joined hands with Axis Bank, Yes Bank, and HDFC Bank for similar partnerships. The National Payments Corporation of India (NPCI), which oversees UPI transactions, requires major players to have at least three bank partners.

NPCI is currently collaborating with various banks to expedite this partnership process by March 15.

Bank partners in the UPI system act as payment service providers (PSPs), connecting third-party applications to the banking network. As Paytm already had a partnership with PPBL, additional bank partners weren't necessary.

On February 23, the RBI announced the seamless migration of customers and merchants with '@paytm' handles from PPBL to a new set of identified banks to avoid disruptions.

Axis and Kotak among banks likely to join

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Additionally, Paytm is reportedly in discussions with Axis, Canara, Yes, and Kotak Mahindra Bank to migrate merchant accounts from the payments bank.

The efficiency and reliability of third-party apps heavily rely on PSP banks, impacting payment speed and minimizing transaction failures. To reduce risks, major players like PhonePe and Google Pay typically maintain partnerships with at least three banks.

Over the past three years, PPBL has been the top gainer among banks in the UPI system, handling more than 20 percent of incoming credit transactions. Even though it's a big player, it's also known for having very few transaction failures compared to other banks.