RBI: To promote digital payments, the Reserve Bank of India (RBI) has made a significant decision. Payments can now be made using prepaid payment instruments (PPIs) through third-party UPI apps. The central bank has stated that this change aims to enhance interoperability within the digital payments ecosystem. Throughout this article, we will share details about the recent RBI updates to UPI rules.
What Are Prepaid Payment Instruments (PPIs)?
Prepaid Payment Instruments (PPIs) are systems that allow users to store funds in a card or digital wallet for future transactions. PPIs are commonly used for subscriptions, remittances, and other payments. The recent RBI rule connects these PPIs to the UPI ecosystem, which is India’s leading digital payment platform.
What Is the New UPI Rule?
Previously, PPIs such as digital wallets, gift cards, and metro cards could only be used through their respective apps. However, under the new rule, PPI holders with full-KYC (Know Your Customer) verification can now link their PPIs to popular UPI apps like Google Pay, PhonePe, Paytm, and BHIM, just as bank accounts are linked.
#RBI now allows interoperability of full-KYC prepaid payment instruments (PPIs) for UPI transactions via third-party apps like #PhonePe, #GooglePay, and #Paytm. This move enhances transaction flexibility, improving access for rural users and boosting digital wallet engagement.… pic.twitter.com/vjL7hjcYaK
— Business Standard (@bsindia) December 28, 2024
According to the RBI circular, only fully verified (full-KYC) PPIs will be eligible for UPI payments. Transactions initiated through PPIs will first be verified using the customer’s existing PPI credentials, ensuring security through a pre-authorization process before the transaction is processed via the UPI system.
Making Digital Payments More Convenient
RBI has also clarified that PPI issuers, acting as payment system providers, are not allowed to onboard customers of other banks or PPI issuers. This step ensures the prevention of potential conflicts of interest and maintains a clear set of rules for the system. This new rule will not only make digital payments more convenient but will also strengthen the Digital India initiative by further enhancing the UPI system.
Avijit Das
A sports journalist driven by passion and dedication, I seamlessly blend my love for writing and sports. Currently with Timesbull, I have honed my craft at Sportskeeda, Cricreads, and Athlete Fortune. I live and breathe sports—whether it's football, cricket, cards, or chess, I'm always up for a challenge. A die-hard...
