UPI Revolution: RBI’s Rule Change Unlocks Cross-App Wallet Transactions

UPI rule change for PPIs: Unified Payments Interface (UPI) and wallets like Paytm, PhonePe, and Amazon have become integral to our daily transactions. Whether it's paying for groceries, bills, or other expenses, we rely on these platforms regularly.

However, a common complaint among users is the limited flexibility in using wallet funds for UPI transactions. Typically, you can only use wallet money through the issuer's app, like PhonePe for PhonePe wallet. Using the same funds through other UPI apps is not possible, which is also the case for prepaid cards. Now, the Reserve Bank of India (RBI) has proposed an update, allowing users to link their prepaid payment instruments (PPIs) with third-party UPI applications.

What are prepaid payment instruments?

Prepaid payment instruments (PPIs) are tools for making payments using stored money, like wallets or cards, states an ET report. You can load funds into them and use them for UPI payments or online transactions. PPIs work separately from your bank account. When you use them for payments, the money comes from the prepaid account linked to the PPI. So far, wallets could only be used for UPI payments through the issuer's app, as per RBI regulations.

Proposal to link PPIs with third-party UPI apps; here’s what RBI Governor said

RBI Governor Shaktikanta Das stated on April 5th that there is a proposal to allow the linking of PPIs with third-party UPI apps to offer greater flexibility to PPI holders. This will empower PPI holders to make UPI payments similar to bank account holders.

Unlocking cross-app use with new RBI rules

Customers can now use any UPI app to access their wallets, even if they're from different companies, as explained by Shivaji Thapliyal from Yes Securities India Ltd.

With the new RBI rules, PPI wallet holders are no longer tied to the issuer of the wallet, says Shravan Shetty from Primus Partners. This means that customers can now use their wallet balance seamlessly on other UPI-enabled apps, extending its usability beyond the wallet's platform.

For instance, if you have funds in your PhonePe Wallet, you can access them through any third-party UPI app, not just the PhonePe app. This allows users to access their money stored in wallets like PhonePe, Amazon Pay, through any third-party UPI application.

Can you use BigBasket, Milkbasket, Ola Money, and Country Delight wallets with other UPIs?

There are closed wallets like those from BigBasket, Country Delight, Milkbasket, and Ola Money, where you can only use the loaded money to purchase goods and services from that specific company through their app. This money cannot be used elsewhere.

Will the RBI directive enable wallet funds usage across third-party UPI apps?

According to Vinayak Goyal, Executive Director of AGS Transact Technologies Limited, closed-loop PPIs can only be used for a single merchant and are not UPI certified, so they cannot be integrated into third-party apps. The RBI's decision to link UPI with PPI applies only to open-loop PPIs, which are accepted on multiple merchant platforms. This is expected to encourage the adoption of open-loop PPIs, offering users more payment options and empowering them with features like expense tracking and secure transactions, especially for smaller amounts.

Further clarification on this issue is expected soon as the central bank releases more directions on how the new rule will operate.

New PPI rules: Boosting options, flexibility, and security

The new RBI rule for PPIs offers customers more options, flexibility, and security. According to Shetty, this means customers can use their wallet balance at a wider range of merchants, making digital payments more convenient without the need to switch between different apps. This rule also benefits rural areas where many small banks don't offer UPI services.

According to Sarvjeet Singh Virk, this will address challenges such as UPI unavailability with certain PPI issuers, allowing more people to access organised financial management. Looking ahead, Shetty suggests viewing wallets as a "debit card" for online transactions.

Convenient UPI transactions: Using wallet funds

Wallets are handy for small UPI transactions like Rs 10 or Rs 100. Now, users can use their wallet or prepaid account funds through third-party apps for UPI payments. This is especially helpful for smaller transactions and enhances security by avoiding the need to share bank account details, says Goyal.

Shetty further adds that the RBI's announcement, enabling UPI access for PPI wallets through third-party apps, offers customers more payment choices, convenience, and wider acceptance.

UPI Revolution: RBI’s Rule Change Unlocks Cross-App Wallet Transactions UPI Revolution: RBI’s Rule Change Unlocks Cross-App Wallet Transactions Reviewed by Tech Ugly on Monday, April 15, 2024 Rating: 5

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