What’s the Update?
The Reserve Bank of India (RBI) has introduced a feature that allows full-KYC Prepaid Payment Instrument (PPI) users to access the UPI ecosystem through third-party applications.
Why does it Matter?
Previously, PPI users were restricted to using UPI services only via their issuer's apps. This limited flexibility and choice. With this update, PPI holders can now benefit from the seamless and user-friendly experience of third-party UPI apps, just like traditional bank account users.
How it Works?
Link PPIs to UPI Apps: Full-KYC PPIs can now be linked to third-party UPI applications.
Secure Transactions: Transactions will be authenticated using UPI credentials for security purposes.
Interoperability Empowered: Updated Master Directions now mandate PPI issuers to support interoperability, making the system more user-centric.
The Impact
This measure lines up with RBI’s April 2024 Monetary Policy goals to promote flexibility and interoperability in digital payments. By enabling PPI holders to access third-party UPI apps, the RBI is moving on to a more inclusive digital payments environment.
