On November 26, Paytm informed exchanges that the Reserve Bank of India (RBI) had asked to Paytm Payment Services (PPSL) to reapply for the payment aggregator license in 120 days.

The fintech company’s subsidiary has applied for authorisation to provide payment aggregation (PA) services to online merchants.

Incumbents such as Razorpay, Pine Labs, Cashfree and CCAvenues have received in-principle approval from regulators, while BillDesk and PayU await responses.

Mobikwik is the only well-known company among other small companies whose application was rejected by the RBI because the company failed to meet the net worth requirement. The company has reportedly reapplied for a license.

Paytm also responded that its application “has not been rejected”. “RBI did not reject our application, but only asked us to reapply within 120 days. We are taking all necessary steps and hope to obtain the required approval as soon as possible,” a company spokesperson said.

PPSLs need to resubmit their PA applications within 120 calendar days, the central bank said. Other steps include seeking the necessary approvals for Paytm’s past downward investments in PPSL to comply with the government’s foreign direct investment (FDI) guidelines rather than recruiting new online merchants. The company noted that the RBI made no other “significant observations” in the letter.

“This has no material impact on our business and revenue as RBI information is only used for onboarding new online merchants. We can continue to attract new offline merchants and provide them with payment services including kiosk QR, Soundbox, card machine,” the statement said.

PPSL can continue to do business with existing online merchants, and services to them will not be affected, the company added. “We expect to obtain the necessary approvals and resubmit the application on time,” the company said.

According to the Paytm Payments Bank website, the company has ten crore KYC customers and adds 4 lakh new users every month. “We are also the largest issuer of FASTags, with over 80 lakh FASTags issued,” the website states.

As the payments space heats up, competition with Paytm ensues, with more offline players looking to offer omnichannel payment services to merchants through online gaming, and existing players ramping up their offerings.

Paytm rival PhonePe is also developing its payment gateway while it awaits RBI approval for a license. Point-of-sale (PoS) player MSwipe is also making forays into the online payments space, receiving an in-principle license approval in August this year.

It is also the regulator’s second blow to Paytm after the RBI in March directed it to stop attracting new customers to Paytm Payments Bank. The company said on November 7 that the ban had not been lifted and Paytm Payments Bank’s management has received the RBI-mandated IT auditor’s report and the central bank’s observation.