Paytm Payments Services receives RBI nod to operate as an online payment aggregator, lifting merchant onboarding restrictions and boosting investor confidence.
Shares of One97 Communications Ltd, the parent company of Paytm, rose sharply on Wednesday after Paytm Payments Services received the Reserve Bank of India’s (RBI) in-principle approval to operate as an online payment aggregator. The stock surged nearly 6%, hitting a 52-week high of Rs 1,186.50 on the BSE and Rs 1,187 on the NSE.
This regulatory approval is a major milestone for Paytm Payments Services Limited (PPSL), a wholly-owned subsidiary of One97 Communications. The RBI’s nod lifts the restrictions imposed on the company in November 2022, which had prevented it from onboarding new merchants. In a filing, the company confirmed that the RBI granted the authorisation under the Payment and Settlement Systems Act, 2007, enabling PPSL to resume its full payment aggregator operations.
The journey to this approval was not straightforward. Paytm had initially applied for the payment aggregator licence in March 2020. However, compliance issues related to foreign direct investment (FDI) delayed the process. The company addressed these gaps and reapplied in September 2024. The RBI’s approval now reflects confidence in Paytm’s compliance measures and operational readiness, particularly following strategic changes such as the exit of Chinese fintech firm Ant Financial, which removed foreign shareholding from the company.
The approval is expected to significantly enhance Paytm’s ability to expand its merchant base and strengthen its market position. JM Financial has welcomed the development, maintaining a ‘Buy’ rating on Paytm stock with a target price of Rs 1,320 for June 2026, suggesting a potential upside of nearly 18%. The brokerage also highlighted that this regulatory clearance could pave the way for further approvals, potentially boosting Paytm’s financial performance.
Paytm’s regulatory approval comes amid tighter oversight for payment aggregators and gateways. Earlier, these entities often operated in partnership with banks without direct supervision. The RBI’s framework now mandates robust merchant due diligence and transaction monitoring to mitigate money laundering risks. This shift is expected to bring more transparency and security to India’s digital payments ecosystem, benefiting not just Paytm but the broader industry as well.
Financially, Paytm has shown a strong recovery. In Q1FY26 (April–June 2025), the company reported a consolidated net profit of Rs 123 crore, compared to a loss of Rs 839 crore in the same quarter last year. Operating revenue rose 28% year-on-year to Rs 1,918 crore, while contribution profit grew 52% to Rs 1,151 crore, resulting in a contribution margin of 60%. The turnaround has been driven by controlled expenses, monetisation of non-core assets, and strategic adjustments to the merchant lending business.
The RBI approval also comes with conditions. PPSL is required to conduct a systems audit, including a cybersecurity review, within six months. Failure to comply could lead to the in-principle authorisation lapsing. Additionally, PPSL must obtain prior approval for any change in shareholding, acquisition of control, or transfer of payment system operations. These requirements are part of the RBI’s efforts to ensure regulatory compliance while supporting the growth of digital payment services.
Overall, this development marks a significant turning point for Paytm. The company can now resume merchant onboarding and expand its digital payment infrastructure after nearly three years of uncertainty. With regulatory clarity, improved financial performance, and strategic adjustments to ownership, Paytm is well-positioned to strengthen its foothold in India’s competitive digital payments sector.
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