RBI comes out with New UPI rules for access for prepaid instruments:
RBI comes out with New UPI rules for access for prepaid instruments:
The Reserve Bank Of India seems to be coming out with a new development of New UPI rules for access for prepaid instruments:
RBIs mindset seems to be of broad basing UPI across the ecosystem in order to foster competition amongst other products and help fuel further innovation
With this new development by RBI, India’s fintech landscape takes another leap forward.
RBI’s determination to allow third-party UPI apps to make UPI payments from Prepaid Payment Instruments (PPI) wallets constitutes a notable stride in this direction. This strategic measure will encourage digital transactions for small-value transactions, effectively curbing cash usage and fostering the growth of a cashless economy.
The key nitty-gritty from this new development by the RBI is that now PPI wallet holders (Paytm, PhonePe, Freecharge, etc) can now link their wallets with third-party UPI apps and make a payment.
As per Dilip Modi, founder, Spice Money, “RBI’s announcement grants PPI users the ability to seamlessly integrate their accounts with a wide range of UPI-enabled services, mirroring the convenience and flexibility traditionally reserved for standard bank account holders.
However, banking experts also conclude that this new development will result in increased volume of transactions in PPI wallets. It will also allow further penetration given there were a lot of PPIs who had customers but never had a separate UPI App, now such instruments can be linked to the third party application providers (TPAPs) and spends can be done using UPI App. We expect the PPI volumes to grow once these are made truly inter-operable.
There will be some changes for the customers given such transactions will now require separate UPI PIN which needs to be generated. Previously, all such UPI PP Apps were using their own mode of authorization
Meanwhile what prompted RBI to come out with such new development?
RBI has come out with this development to ensure that organisational issues of PPI players do not impact the customers in terms of withdrawal of money stuck in their wallets.
This provides flexibility to the customers to use the money that otherwise may be stuck in PPI wallets, due to issues beyond the control of the customers. This will force PPI players to innovate more on their reward and incentive structures to increase stickiness of customers.
News Edit K.V.Raman
