One 97 Communications, the company behind Paytm, has shifted its entire offline merchant payments business to subsidiary Paytm Payments Services Limited (PPSL) following RBI approval for it to operate as a payment aggregator. The transfer, executed via a slump sale agreement on November 28, becomes effective from midnight November 30 after shareholder approval on November 23. Paytm serves around 1.4 crore offline merchants through soundboxes, POS machines, QR codes, and EDC devices, making this a core revenue stream.
The move consolidates all payment aggregation under the regulated PPSL entity, aligning with RBI’s master directions and boosting operational efficiency. PPSL received its Certificate of Authorisation on November 26, lifting a freeze on new merchant onboarding imposed since November 2022. The book value of the transferred business stood at Rs 960 crore as of March 31, 2025, with Paytm receiving lump-sum cash consideration at that value.
Key Executives Move to PPSL for Payments Focus:
Ripunjai Gaur, COO of offline payments, and Deependra Singh Rathore, CTO of payments, transfer to PPSL alongside the business, ceasing as senior management personnel at One 97 Communications. This strengthens PPSL’s leadership for handling QR, soundbox, EDC, and POS payments from offline merchants. No change occurs in ultimate ownership or control, as PPSL remains a wholly-owned subsidiary.
Paytm’s shares rose nearly 3% to Rs 1,320 on NSE Friday, outperforming the flat Nifty index, reflecting market approval. Year-to-date gains stand at 29.74%, with 42.51% returns over 12 months.
RBI Licence Ends Long Regulatory Hurdles:
PPSL first applied for payment aggregator status in November 2020 but faced rejection in November 2022 over Press Note 3 FDI compliance issues. RBI granted in-principle approval in August 2024 after government nod for downstream investment, followed by system and cybersecurity audits. The final COA on November 26 enables fresh merchant sign-ups, critical after the 2022 curbs.
Last month, Paytm announced plans to house online and offline payments under PPSL for regulatory synergy. Growth in this segment will now flow into One 97 Communications’ consolidated financials.
Offline Payments Drive 47% of Paytm’s Revenue:
With a net worth of Rs 960 crore as of March 31, Paytm’s offline merchant payments division brought in Rs 2,580 crore in FY25, or 47% of the company’s total standalone revenue. This sector drives 1.4 crore merchants’ QR codes, soundboxes, EDC machines, and payment systems, serving as a pillar during the expansion of UPI and the rise in digital payments.
The shift to PPSL unlocks focused expansion, merchant loans, and payment processing margins while consolidating under RBI oversight for sustained profitability.
RBI Compliance Clears Path for Paytm Expansion:
RBI’s final approval followed in-principle nod in August 2024 after resolving Press Note 3 FDI issues, including audits and government clearances for downstream investments. This ends the 2022 merchant onboarding freeze, letting PPSL legally collect and settle payments for new clients under strict guidelines. Compliance now positions Paytm for scalable growth in UPI and card payments amid fintech competition.
Merchant Onboarding Resumes Amid Fintech Recovery:
The licence thaw allows PPSL to expand its 1.4 crore merchant base, leveraging Paytm’s soundbox and POS dominance. Restructuring addresses past RBI scrutiny, including the 2024 Paytm Payments Bank restrictions. Analysts see it as a step toward stabilising Paytm’s payments ecosystem post-regulatory resets.
Paytm’s offline strength complements its online gateway, positioning PPSL for UPI and card transaction surges. The seamless transfer without ownership shifts ensures continuity for merchants and users.
