Paytm UPI will now support UPI trading blocks i.e. Single Block Multiple Debits, resulting in simplification of stock market trading and investing. Using this feature Paytm UPI users can now set up automatic payment deductions directly from their bank account for stock market transactions, without having to transfer large sums to their trading accounts on supported stock broking apps. This will enable Paytm UPI users to continue to earn interest on their savings account bank balance, until they make their actual stock market transactions, since funds remain in their bank account.
To say about this feature in a nutshell, the money from your bank account will only be deducted once you place the buy transaction on the stock market for buying any security. Like if you have Rs 10,000 in your bank account and want to buy shares of a company priced at Rs 1200 per share, then as soon as you hit the buy button for this share, the exact amount of money will be debited from your bank account. Earlier, you had to transfer the money from your bank account to the trading account and then place the buy order. After this the remaining balance would be transferred back to your bank account if unused. This delay is now eliminated through this UPI trading block feature.
Read below to know highlights of this UPI trading block feature and a guide on how to use it:
Highlights of the Paytm UPI Trading Block feature
According to the press release here are the details:
- Paytm’s UPI Trading Blocks is built on NPCI’s infrastructure and leveraging UPI, deducts the amount only when a trade is made, and this happens automatically without the need for a UPI PIN.
- Once the trade is completed, users can manage and track their funds on the Paytm app. Currently supported for UPI handles of Axis Bank (@ptaxis) and Yes Bank (@ptyes), this feature will soon be available for other UPI handles of State Bank of India (@ptsbi) and HDFC Bank (@pthdfc). It ensures funds remain in the investor’s bank account while offering an easy option to manage and conveniently pay for trades.
- No Need to Transfer Funds to Brokers: Funds are directly blocked in the bank account, eliminating the need for large transfers.
- Full Transparency: Easily track blocked funds in one place on the Paytm App, supported by leading partner banks.
- Earn Interest: Funds remain in the user’s bank account until needed, allowing them to continue earning interest.
- Automates Payment Deductions: During trades, enabling faster transactions
- without the need for a UPI PIN.
On November 11, 2024, the Securities and Exchange Board of India (SEBI) approved the proposal allowing qualified stock brokers to either offer the facility of trading in the secondary market using the UPI-based block mechanism to their clients, similar to the ASBA facility, or a three-in-one trading account facility. As per the proposal, Qualified Stock Brokers (QSBs) must offer one of these two options, in addition to the current mode of trading.
ASBA or application supported by block amount (ASBA) is the technical term for the feature where the money will only be debited when the transaction is actually executed. It is a popular mode of payment for initial public offering (IPO) applications where uncertainty about allotment of shares exists. So, in this case only if the shares are allotted, money will get debited from the bank account. In the meantime, of application and allotment of IPO shares, this money will stay in the savings bank account and earn interest. If the allotment is not successful the block (lien) on such an amount of money will be opened. Email queries sent to Paytm about using this feature went unanswered till the time of publishing this article.
How to use the UPI trading blocks feature on stock broking apps
In order to use this feature, the stock broker needs to support payments using the ‘Single Block Multiple Debits’ option.
Here’s a step-by-step guide on how to use this:
Step 1: Log in to your stock broking platform account using your credentials.
Step 2: Go to the ‘Add Funds’ section and select the ‘Single Block Multiple Debits’ option
Step 3: Choose Paytm App from the available payment options and enter your UPI PIN to complete the process.
Paytm spokesperson said in the press release, “This service simplifies fund management by enabling seamless, automatic payment deductions directly from bank accounts, eliminating the need to transfer large sums to broker or brokerage apps.”
NPCI guidelines about UPI trading block feature
According to a circular by the National Payments Corporation of India (NPCI) dated July 31, 2024, the following guidelines need to be followed:
- The issuer banks shall support the functionality of Single Block Multiple Debit services wherein the bank shall have the mechanism to create blocking of funds in the customer’s account and shall allow multiple debits against the block. The fund shall be blocked in the account till the time mandate is expired, revoked or the mandate amount is exhausted.
- The UPI Apps shall support the necessary functionality and interface on their app for the customer to process the transactions.
- Members shall ensure that the mandate created successfully shall also be executed successfully. All the necessary validation should be at the time of mandate creation only.
- The issuer bank shall ensure the necessary communication to the customer for all the mandate related operations.
- Acquiring banks shall ensure that they are extending the services of Single Block and Multiple Debits to the relevant merchants and are also making the necessary developments at their end to support the services.
- Banks shall ensure that proper reconciliation of transactions shall be performed as per the extant NPCI guidelines.
