Unified Payments Interface (UPI) transactions have become commonplace, but one restriction impedes the UPI user experience: you can only use the funds in your online wallet to make UPI transactions to websites or mobile applications that the prepaid payment instrument (PPI) issuer offers.
The Reserve Bank of India’s (RBI) new regulations have made it possible for UPI users to make payments through any other third-party application using their wallet funds.An outline of the various prepaid payment options is provided below.
PPIs, or prepaid payment instruments, are banking tools that let customers conduct cashless transactions and store money. Wallets, cards, and vouchers are among them; they can be used for fund transfers, purchases, and services.
Fresh rules by the RBI
On April 5, RBI Governor Shaktikanta Das said, “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”.
Will it impact existing PPI users once linked with third-party UPIs?
Customers will have the ability to access any of their wallets using any of their UPI applications, regardless of whether the wallet and the UPI app are owned by separate companies, said Shivaji Thapliyal, Head of Research at YES Securities as quoted in an Economic Times report.
“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.
“Customers can now use their wallet balance seamlessly on other UPI-enabled apps, expanding its utility beyond the wallet’s platform,” Shravan Shetty, MD at Primus Partners mentioned in conversation with ET.
