Reserve Bank of India (RBI) allows UPI access for prepaid payment instruments via third-party applications

The Reserve Bank of India (RBI) has approved using third-party applications for UPI access to prepaid payment instruments (PPI). Previously, UPI payments between bank accounts could be made through either the bank’s own UPI app or third-party apps. However, UPI payments from or to a PPI could only be processed via the issuer's app. Per the RBI’s Development and Regulatory Policies statement dated April 5, 2024, the central bank has permitted full-KYC PPIs to conduct UPI transactions through third-party apps. This move allows PPI holders to make and receive payments via mobile applications from third-party UPI service providers.

The RBI clarified that only full-KYC PPIs can conduct UPI transactions through these third-party apps, with the issuer’s mobile application authenticating the transactions using the customer’s existing PPI credentials. The transactions will be pre-approved before reaching the UPI system. The statement further mentioned that PPI issuers cannot onboard customers from other banks or PPIs, and they may facilitate the discovery of their full-KYC PPIs on third-party apps, enabling linking these PPIs to their UPI handles. Users can now transfer or receive funds in their PPI wallets, such as Paytm or Google Pay, using third-party UPI apps without relying on the issuer’s specific interface.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.