Goseeko blog

Why is Paytm in the news and how will it impact you? 

by Storynama Studios

Is Paytm working, temporarily suspended, will you lose your money or is it time to get out?

If you read what Paytm’s Vijay Shekhar Sharma wrote on X (formerly Twitter), you would say – ‘all is well’. He posted, “Your favourite app is working, will keep working beyond 29 February as usual.” But that’s not the whole story; it’s only a part of it. 

What Happened

The Reserve Bank of India in a statement released on January 31, 2024 said that Paytm will not be allowed “any further deposits or credit transactions or top ups in any customer

accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. after February 29,
2024, other than any interest, cashbacks, or refunds which may be credited anytime.”

What does it mean?

In simple terms, if you have a Paytm account, no fresh deposits are allowed in your account or wallet after February 29. So even though your account will not go defunct, you cannot add more money or do any transactions like UPI payments after February 29. Whatever account balance you have can be used up or even transferred out. 

So if you have a Paytm wallet with Rs 500 in it, you can use it till the money is exhausted (even after February 29). But you will not be able to top up your wallet after February 29. Same would be the case with the national common mobility card, FASTags, etc.

If you have a FASTag account linked with Paytm, most have advised getting a new FASTag. If you have some balance on the FASTag, exhaust it of transfer it out.

What has Paytm told its users?

In its communication to its users, Paytm says, “Please note that you will not be able to deposit or add money to your Paytm Payments Bank Account/Wallet after Feb 29, 2024. However, there is no restriction on withdrawal of money from your existing balance even after Feb 29, 2024.” (full statement on screenshot attached)

So Vijay Shekhar Sharma’s post on X notwithstanding, the reality is that Paytm has been impacted and as a Paytm user, it will impact you too.https://x.com/vijayshekhar/status/1753261279324643602

Why did RBI act against Paytm?

On March 11, 2022, RBI had stopped Paytm from onboarding new customers. So there were already some red flags. Further audit has shown that there have been ‘persistent non-compliances’, as per the RBI press release. 

Paytm, in its statement, has said that while the RBI decision impacts Paytm Payments Bank Limited, it does not impact OCL (One 97 Communications Limited). “OCL’s offline merchant payment network offerings like Paytm QR, Paytm Soundbox, Paytm Card Machine, will continue as usual, where it can onboard new offline merchants as well,” as per Paytm’s filing with the Bombay Stock Exchange.  

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