You can now use prepaid wallets via any UPI app
What's the story
The Reserve Bank of India (RBI) has made a significant move by allowing Unified Payments Interface (UPI) payments to and from prepaid payment instruments (PPIs) through third-party applications. This decision, announced on Friday, marks a pivotal change in the digital payments landscape, enabling users to transact seamlessly using popular apps like PhonePe and Google Pay. Previously, PPI holders could only conduct UPI transactions through the mobile applications provided by their respective PPI issuers.
Policy change
New regulation aims to enhance the interoperability of digital wallets
This new regulation aims to enhance the interoperability of digital wallets, allowing users greater flexibility in managing their finances. With the integration of UPI into third-party apps, users will no longer be confined to the limitations of individual wallet applications. Instead, they can link their PPIs with various UPI-enabled platforms, facilitating easier transactions for everyday purchases. This restriction has now been removed by the RBI's new policy, expanding the scope for digital transactions with PPIs.
Impact
How does the new regulation affect UPI users
Imagine a consumer who regularly uses a digital wallet like Paytm or PhonePe for small purchases, such as groceries or coffee. With the new RBI regulation, this consumer can now link their prepaid wallet directly to their preferred UPI app. This means they can pay for their items without needing to transfer funds back and forth between their bank account and the wallet, streamlining the payment process.