Paytm Payments Services, a unit of One97 Communications, has received in-principle approval from the Reserve Bank of India (RBI) to operate as an online payment aggregator starting August 12, 2025.

The RBI directed the company to conduct a system and cybersecurity audit using an auditor empanelled with CERT-In, or holding relevant CISA or DISA qualifications.

This approval follows Paytm’s application for a payment aggregator licence and earlier downstream investment approval from the Ministry of Finance, Department of Financial Services.

The RBI has also lifted merchant onboarding restrictions imposed on Paytm in November 2022, but the authorisation is limited to online payment aggregation.

In 2024, the RBI banned the operations of Paytm Payments Bank, which led to a strategic focus on merchant monetisation and cost optimisation.

🔗 Source: YourStory

🧠 Food for thought

1️⃣ Regulatory compliance remains a multi-year hurdle for Indian fintech companies

Paytm’s journey to secure payment aggregator authorization illustrates the complex regulatory landscape that fintech companies navigate in India.

The company first applied for the license and faced rejection in November 2022, followed by restrictions on onboarding new merchants. This three-year approval process reflects broader systemic challenges in India’s fintech sector.

Payment service providers face multiple compliance requirements, including the need for specialized cybersecurity audits by CERT-In empanelled auditors or certified professionals. These stringent requirements often create lengthy approval timelines.

The regulatory environment has also introduced structural challenges for revenue generation. According to market analysis, regulatory caps on Merchant Discount Rates pose ongoing revenue compression risks for payment service providers.

Even established payment banks have struggled with similar regulatory complexities, with three of the original eleven licensed entities withdrawing due to competitive pressures and profitability concerns.

2️⃣ Chinese ownership divestment unlocks regulatory pathways for Indian startups

Antfin’s complete exit from Paytm through a ₹3,980 crore stake sale demonstrates how foreign ownership structures directly impact regulatory approvals in India’s fintech sector.

JM Financial analysts characterized this as a “clean-out trade” that could lead to crucial regulatory approvals, maintaining their ‘buy’ rating specifically because the ownership change eliminates Chinese shareholding concerns.