Reserve Bank of India (RBI) on Friday said that users of prepaid payment instruments (PPIs) can now make and receive Unified Payments Interface (UPI) transactions from and to full-KYC-compliant PPIs via third-party mobile applications, expanding the scope of digital payment services, as stated in their circular.
“A PPI issuer shall enable holders of only its full-KYC PPIs to make UPI payments by linking its customer PPIs to its UPI handle. UPI transactions from PPI on the issuer’s application shall be authenticated using the customer’s existing PPI credentials,” it said, news agency PTI reported.
The RBI decision aims to enhance flexibility for PPI holders, including users of gift cards, metro cards, and digital wallets, by enabling seamless UPI transactions through third-party apps.
These transactions will be pre-approved before being processed through the UPI system. RBI has specified that PPI providers, whilst operating as payment system facilitators, must not register customers belonging to banks or other PPI issuers.
Currently, UPI transactions involving bank accounts can be conducted using either the bank’s UPI app or third-party applications. However, UPI payments involving PPIs are restricted to the mobile application provided by the PPI issuer.
UPI, developed by the National Payments Corporation of India, functions as an immediate payment system that enables mobile-based interbank transfers.
What are PPIs?
PPIs serve as payment tools that allow users to purchase goods and services, access financial services, and transfer funds based on their stored value.
What are Full-KYC PPIs
Banks and non-banks provide these PPIs after completing Know Your Customer (KYC) verification. Users can utilise these PPIs for purchasing goods and services, transferring funds, or withdrawing cash, as per RBI.
