Paytm‘s share price shot up sharply on Friday morning surging up 5% to hit the upper circuit.

What Happened: The National Payments Corporation of India (NPCI) has approved One97 Communications Limited, the parent company of Paytm, to participate in UPI services as a Third-Party Application Provider (TPAP) under the multi-bank model.

This approval is significant for Paytm as it allows the company to continue offering Unified Payments Interface (UPI) services to its app users, especially after its banking unit, Paytm Payment Bank Limited (PPBL), ceases most operations post-March 15 due to regulatory action.

Under the new model, Paytm will collaborate with four new banks — Axis Bank, HDFC Bank, State Bank of India, and Yes Bank — who will serve as its Payment System Providers (PSP). These PSPs act as intermediaries between the UPI app and the banking channel.

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Previously, Paytm provided UPI services through PPBL, which held the TPAP license. However, due to regulatory restrictions on the payments bank, Paytm needed to establish partnerships to continue UPI services just like other players Amazon Pay, GPay and PhonePe.

Yes Bank will now serve as the merchant acquiring bank for Paytm’s existing and new UPI merchants, and the @Paytm handle will be redirected to Yes Bank. This ensures that existing users and merchants can continue UPI transactions and AutoPay mandates seamlessly.

NPCI has instructed Paytm to complete the migration for all existing handles and mandates to the new PSP banks as soon as possible. Paytm had previously shifted its nodal accounts to Axis Bank in February to settle UPI payments, ensuring uninterrupted payments for merchants even after the March 15 deadline set by RBI.

Price Action: Paytm’s share price was locked in the 5% upper circuit at ₹370.70 on Friday morning.

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