Reserve Bank of India has proposed permitting linking of Prepaid Payment Instruments (PPIs) through third-party UPI applications, thus allowing PPI wallet holders more flexibility to make UPI payments.

At present, UPI payments from bank accounts can be made only by linking a bank account through the UPI application of the bank or using any third-party UPI application. However, the same facility is not available for PPIs, and wallet holders can make UPI transactions only by using the web or mobile application provided by the PPI issuer.

Small transactions

RBI Governor Shaktikanta Das said this will further enhance customer convenience and boost adoption of digital payments for small value transactions.

“ In the non-urban towns and rural areas, there are still many small banks who do not provide UPI facility and these customers are dependent on third-party PPIs. The unavailability of UPI on a specific PPI issuer or not being able to use another third-party PPI while their PPI issuer would face technical issue, these challenges will now be resolved,” said Mandar Agashe, Founder & MD, Sarvatra Technologies.

Dilip Modi, Founder, Spice Money, said the initiative will allow PPI users to seamlessly integrate their accounts with a wide range of UPI-enabled services, mirroring the convenience and flexibility reserved for standard bank account holders. This will not only simplify the payment process for PPI users but also open up a plethora of digital payment opportunities, especially among small businesses.

“This will facilitate the linkage and usage of the PPI to make digital payments not only through a specific app but through any of the third party UPI applications like PhonePe, Google Pay, etc,” said Jyoti Prakash Gadia, Managing Director at Resurgent India.

PPIs as an instrument of third-party digital payments will also get a boost through fresh ingredients, as the customer shall now have choice to park the funds in PPI to make payments rather than make frequent debits to its bank savings account. This will bring ease of making smaller transactions and boost overall volume of transactions, he added.

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