While the Unified Payments Interface (UPI) has become a part of our everyday life, there’s one limitation that hinders the user experience — not being able to use the money in your online wallet to make UPI transactions to web or mobile application other than that provided by the prepaid payment instrument (PPI) issuer.
Thanks to the Reserve Bank of India’s (RBI) new rules, UPI users will now be able to use their wallet money to pay through any other third-party applications.
So, what has changed? Now, if you have money in your PhonePe wallet, you can access it on any third-party UPI, say Paytm UPI.
To understand the new RBI rules better, let’s look at what the prepaid payment instruments are.
Prepaid payment instruments or PPIs are financial tools that allow users to store value and make cashless transactions. They include wallets, cards, and vouchers, usable for purchases, services, and fund transfers.
PPIs are regulated, with limits on value storage and usage. They offer convenience and security, promoting digital transactions and financial inclusion, but may face acceptance and regulatory challenges.
They are integral to modern digital economies, facilitating efficient, accessible monetary exchanges without physical cash.
What are the new RBI rules for PPIs using UPIs?
RBI Governor Shaktikanta Das on April 5 announced the proposition of permitting the linking of PPIs through third-party UPI applications, to enable PPI users to make UPI payments like regular bank account holders.
“To provide more flexibility to PPI holders, it is now proposed to permit linking of PPIs through third-party UPI applications. This will enable the PPI holders to make UPI payments like bank account holders,” Governor Das had said.
What will change for PPI users after it is linked with third-party UPIs?
According to an Economic Times report quoting YES Securities’ Head of Research Shivaji Thapliyal, customers will be able to use any of their UPI apps to access any of their wallets, even if the wallet and the UPI app belong to different companies.
“Suppose you have a PhonePe Wallet with some outstanding balance in it. Now, to access the balance in the PhonePe Wallet, it is no longer necessary to go through the PhonePe app. You can go through any other third-party UPI app,” Thapliyal told ET.
So now, the PPI wallet users will not have to be completely dependent on the PPI wallet issuer.
“Customers can now use their wallet balance seamlessly on other UPI-enabled apps, expanding its utility beyond the wallet’s platform,” Shravan Shetty, Primus Partners MD told ET.
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Published: 10 Apr 2024, 09:12 PM IST