Indian fintech giant Paytm has received long-awaited “in-principle” approval from the Reserve Bank of India (RBI) to operate as a payment services provider for online merchants, a key regulatory breakthrough that comes just days after China’s Ant Group sold its remaining stake in the company.
Parent company One97 Communications confirmed the approval in a stock exchange filing, noting it allows Paytm’s Payment Services unit to function as an online payment aggregator. The clearance follows more than two years of regulatory delays after the fintech was initially denied a license in November 2022 for not meeting India’s rules on investments from countries sharing a land border.
Without the license, Paytm had been barred from onboarding new online merchants. That restriction is now lifted, enabling the platform to process transactions for merchants across cards, net banking, and the government-backed Unified Payments Interface (UPI).
The RBI’s approval comes over a year after it banned Paytm Payments Bank from accepting fresh deposits and enabling credit transactions, a blow that Paytm navigated by partnering with major banks including Axis Bank, HDFC Bank, State Bank of India, and Yes Bank.
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Paytm remains the third-largest UPI payments platform, behind PhonePe and Google Pay, processing 1.27 billion transactions worth ₹1.34 trillion ($15B) in June 2025, per NPCI data. Despite trailing its rivals, Paytm offers a diverse suite of services, from offline payment hardware to credit and lending solutions, to attract consumers and merchants.
The RBI approval requires Paytm to complete a system and cybersecurity audit within six months. Failure to do so will void the approval.
The regulatory green light follows Ant Group’s exit from Paytm, with the Chinese firm selling its last 5.8% stake for $454 million, building on an earlier $628 million divestment in 2023.
Paytm’s market rebound has been notable, the company posted ₹1.23 billion ($14M) net income in Q1 FY2026, up from a loss the previous year, with revenues growing 28% YoY to $224 million. Shares have climbed 13.25% year-to-date, signaling renewed investor confidence.
