RBI gives green signal to UPI payments through PPI

New Delhi: The Reserve Bank of India on Friday allowed prepaid payment instrument holders to make and receive UPI payments through third party mobile applications. The central bank said in the circular that it has been decided to enable payments from UPI to/from prepaid payment instruments (PPIs) provided full-KYC is present on the third-party UPI application (UPI Applications0).

The circular said, “PPI issuer shall enable UPI payments only to its full-KYC PPI holders by linking its customer PPI to its UPI handle. UPI transactions from PPIs on the issuer’s application shall be authenticated using the customer’s existing PPI credentials.” Thus, such transactions will be pre-approved even before reaching the UPI system.

RBI said that as a payment system provider, a PPI issuer should not link customers of any bank or any other PPI issuer with itself. The RBI’s decision is aimed at providing more flexibility to holders of PPIs such as gift cards, metro rail cards and digital wallets.