RBI Grants UPI Access To Full-KYC PPIs In Third-Party Apps: What It Means For Customers

In a further fillip to digital payments in the country, the Reserve Bank of India (RBI) has said that those who use prepaid payment instruments (PPIs) can now make and receive users of prepaid payment instruments (PPIs) can now make and receive Unified Payments Interface (UPI) transactions. The initial announcement on this was made on April 5 this year. The latest circular released today has been issued under Section 18 read with Section 10(2) of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007).

“Currently, UPI payments from/to a bank account can be carried out using the UPI application of that bank or of any third-party application provider. However, UPI payments from/to a PPI can only be carried out using the mobile application provided by the PPI issuer…It has been decided to enable UPI payments from/to full-KYC PPIs through third-party UPI applications. This will enable PPI holders to make/receive UPI payments through the mobile application of third-party UPI applications,” said the circular.

This is likely to be a game changer as far as digital payments are concerned and provide more flexibility to users. At present UPI transitions from/to a bank account is possible only through the UPI application of the bank or any third-party application provider. 

This means that until now UPI payments from bank accounts could be made by linking one’s banking account through the UPI app of the bank or by using a third-party application. However, this facility was not available for PPIs. PPIs could be used to make UPI transactions only by using the application provided by the PPI issuer. Now that is going to change. Now you can use your pre-paid wallet to send and receive UPI payments. 

Now the RBI has made it possible to link PPIs through third-party UPI applications. So PPI holders can now make UPI payments just like the holders of bank accounts. 

However, the RBI has clarified that wallet-issuing companies cannot onboard customers of other banks or wallets. 

The popularity of UPI has gone up substantially over time. 15,547 transactions amounting to Rs 223 lakh crore were made between January and November this year.