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| RBI's Rule: PPIs Linked to Any UPI App |
Unified Payments Interface (UPI) and digital wallets have seamlessly integrated into our daily routines, owing to the pioneering efforts of companies like Paytm, PhonePe, and Amazon. However, users frequently encounter limitations when attempting to utilize wallet funds solely through the designated web or mobile applications provided by the prepaid payment instrument (PPI) issuer.
Understanding Prepaid Payment Instruments (PPIs):
Prepaid payment instruments, or PPIs, serve as mediums for conducting transactions using stored monetary value. These instruments encompass both wallets and cards, allowing users to load them with specific amounts for subsequent use in UPI or online transactions.
Operating independently of users' bank accounts, PPIs deduct funds from the associated prepaid account upon each transaction. Historically, wallet usage for UPI payments was confined to applications provided by the respective PPI issuers.
RBI's New Directive for Linking PPIs with Third-Party UPI:
In a significant move announced by RBI Governor Shaktikanta Das on April 5, 2024, a new regulation permits the linking of PPIs with third-party UPI applications. This pivotal change empowers PPI holders to conduct UPI transactions akin to traditional bank account holders, thereby enhancing flexibility for PPI users.
Impact on UPI Users:
The implementation of RBI's directive heralds substantial transformations for UPI users. Customers are now afforded the liberty to utilize any UPI-enabled application to access their PPI wallets, irrespective of whether the wallet and UPI app are affiliated with different entities.
This development facilitates seamless utilization of wallet balances across various third-party UPI applications, transcending the confines of the wallet's native platform. For instance, individuals possessing balances in wallets such as PhonePe, Amazon Pay, or Paytm can effortlessly access these funds through any third-party UPI application, broadening the utility of their digital assets.