IPO-bound payments company Paytm is looking to turn its payment aggregator business into a new subsidiary called Paytm Payments Services Limited as the deadline to adhere with the Reserve Bank of India’s payment aggregator rules looms large.
The Noida-based company will seek approval from its shareholders to form the new subsidiary in an extraordinary general meeting on September 23.
“The move to transfer payment aggregator business into a new subsidiary is as per RBI’s guidelines,” a company’s executive said on condition of anonymity.
According to the executive, the company is looking to transfer its online payment aggregator business including the payment gateway service providers acting as third party collection agents for overseas travel, and third party INR payment collection agent for foreign merchants of One97 Communications, to the new proposed subsidiary, Paytm Payment Services Limited.
The transfer will have an indicative book value of Rs 275-Rs 350 crore ($39-$50 million), and will be paid in five equal annual installments, the company said in a notice to its shareholders. Entrackr has seen a copy of the notice. The actual consideration will be derived on the basis of book value appearing as of August 31, 2021.
The RBI’s regulation of payment aggregators requires these businesses to be regulated and run by a separate company, after obtaining the license from RBI. These guidelines will come into force in January 2022.
Food aggregator Zomato had also incorporated a wholly-owned subsidiary in the name of Zomato Payments Private Limited earlier this month, to conduct the business of providing payment aggregator and payment gateway services.
Bengaluru-based digital payments firm PhonePe has also received RBI’s in-principle approval to become a account aggregator. Apart from that, close to 30 firms have applied for a payment aggregator license including the likes of Amazon and CRED.