The Reserve Bank of India (RBI) announced on Friday that prepaid payment instruments (PPIs) can now access UPI services through third-party applications.
This move enables PPI holders to send and receive UPI payments via third-party UPI mobile apps.
Current System Overview
At present, UPI payments to and from a bank account can be processed using either the UPI application provided by the bank or a third-party application.
However, when it comes to PPIs, payments can only be facilitated through the mobile application issued by the respective PPI provider.
Reserve Bank Issues Press Release
The Reserve Bank announced in a press release that this decision was made under its regulatory policy dated April 5, 2024.
It stated that prepaid payment instruments (PPIs) would now have UPI access through third-party applications.
What are prepaid payment instruments
A prepaid payment instrument (PPI) is a financial tool that lets users load funds onto a card or digital wallet for future use.
PPIs can be used to buy products, access financial services, and store money.
The PPI issuer will allow only fully verified (full-KYC) PPI holders to make UPI payments by linking their PPIs to their UPI handle.
UPI transactions made from the PPI will be validated using the customer’s existing PPI credentials on the issuer’s app.
These transactions will be pre-authenticated before being processed in the UPI system.
UPI’s Rapid Growth
The Finance Ministry has announced that from January to November this year, the Unified Payments Interface (UPI) recorded over 15,547 crore transactions, totaling Rs 223 lakh crore.
