RBI’s new UPI rule change for PPIs: Soon, you can use money in PhonePe, Amazon Pay wallets to pay via any UPI app | Business

Apr14,2024



Change in UPI rules for PPI: Integrated Payment interface (UPI) and Purse Like Paytm, PhonePe and Amazon have become an integral part of our daily transactions. Be it groceries, paying bills or other expenses, we rely on these platforms on a regular basis.
However, a common complaint among users is the limited flexibility in the use of wallet funds. UPI transaction.Typically, you can use wallet money only through the issuer's app, such as PhonePe phonepe wallet, Using the same funds through another upi apps This is not possible, which is also the case with prepaid cards. Now reserve Bank of India (RBI) has proposed an update that will allow users to link their prepaid payment instruments (PPI) with third party UPI applications.

What are prepaid payment instruments?

An ET report said prepaid payment instruments (PPIs) are instruments for making payments using stored funds such as wallets or cards. 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. Till now, as per RBI rules, the wallet could be used for UPI payments only through the issuer's app.
Read this also RBI introduced two new UPI features! From cash deposits to PPI wallet interoperability – what they mean for you

Here's what the new RBI rule means for users:

Proposal to link PPI to third-party UPI apps; This is what the RBI Governor said
RBI Governor Shaktikanta Das on April 5 said there is a proposal to allow linking of PPIs with third-party UPI apps to provide more flexibility to PPI holders. This will empower PPI holders to make UPI payments at par with bank account holders.
Unlocking cross-app usage with new RBI rules
Customers can now use any UPI app to access their wallets, even if they are from different companies, said Shivaji Thapliyal of Yes Securities India Ltd.
Shravan Shetty of Primus Partners says that with the new RBI rules, PPI wallet holders are no longer tied to the wallet issuer. This means customers can now use their wallet balance seamlessly on other UPI-enabled apps, extending its utility beyond the wallet's platform.
For example, if you have funds in your PhonePe wallet, you can access them through any third-party UPI app, not just the PhonePe app. It 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 wallet with other UPI?
There are closed wallets like BigBasket, Country Delight, Milkbasket and Ola Money, where you can use the loaded money to buy goods and services only from that specific company through their app. This money cannot be used anywhere else.
Will the RBI directive enable the use of wallet funds on third-party UPI apps?
According to Vinayak Goyal, Executive Director, AGS Transact Technologies Ltd, closed-loop PPIs can be used only for a single merchant and are not UPI certified, so cannot be integrated into third-party apps. The RBI decision to link UPI to PPIs applies only to open-loop PPIs, which are accepted on multiple merchant platforms. This is expected to encourage the adoption of open-loop PPIs, provide more payment options to users, and empower them with features like expense tracking and secure transactions, especially for small amounts.
Further clarification on this issue is expected soon as the central bank issues more guidance on how the new rules will operate.
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New PPI rules: Promoting choice, flexibility and protection
RBI's new rule for PPIs provides more choice, flexibility and protection to customers. According to Shetty, this means customers can use their wallet balance across 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 do not offer UPI services.
According to Sarvjit Singh Virk, this will address challenges such as unavailability of UPI with some PPI issuers, allowing more people to access organized financial management.
Looking ahead, Shetty suggests viewing wallets as “debit cards” for online transactions.
Convenient UPI Transactions: Using Wallet Funds
Wallets are useful 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. Goyal says this is especially helpful for small transactions and enhances security by avoiding the need to share bank account details.
Shetty further adds that the RBI announcement, enabling UPI access for PPI wallets through third-party apps provides more payment options, convenience and wider acceptance to customers.



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