UPI Rule Change : The Reserve Bank of India (RBI) has taken a significant step to boost digital payments. Third-party UPI apps will now allow payments to be made using prepaid payment instruments (PPIs). The central bank claims that this modification will enhance interoperability in the digital payments sector.
What are Programmable Payment Instruments (PPIs)?
Prepaid Payment Instruments is a method that allows customers to save money in a card or digital wallet for future purchases. It is commonly used for subscriptions and remittances. RBI’s new rule ties PPIs to the UPI ecosystem. UPI is India’s most powerful digital payment system.
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UPI Rule Change :What exactly is the new UPI rule?
Previously, PPIs like digital wallets, gift cards, and metro cards could only be accessed through their individual apps. PPI holders who have completed full KYC (Know Your Customer) can now link their instruments to major UPI apps such as Google Pay, PhonePe, Paytm, and BHIM, just as bank accounts are linked.
According to the RBI’s circular, only full-KYC PPIs will be authorised to be linked for UPI payments. UPI transactions initiated through the PPI will be confirmed using the customer’s existing PPI credentials. This pre-authorization step ensures that the transaction is confirmed before it is entered into the UPI system.
UPI Rule Change : Will make online payments more convenient.
The RBI has further emphasised that PPI issuers, as payment system providers, cannot accept customers from any other bank or PPI issuer. This measure was done to avoid any potential conflicts of interest and preserve a clear regulation. This adjustment will not only make digital payments more easier, but it will also strengthen UPI, propelling the Digital India agenda forward.
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