 "UPI")
A new rule from the Reserve Bank of India (RBI) is set to make digital payments easier for everyone. The RBI has allowed greater interoperability among UPI apps, meaning users can now pay from their digital wallets using any UPI-enabled app, provided the wallet has completed full KYC (Know Your Customer) verification. This move means that users will no longer be restricted to a single app for their transactions.
What’s Changing?
The RBI has introduced a system that allows users to pay from their digital wallets using any UPI (Unified Payments Interface) app. This is possible for wallets that have completed full KYC (Know Your Customer) verification.This change means that if you have a wallet linked to a UPI-enabled app, you can make transactions without needing to switch between different apps.
In a notification dated December 27, 2024, RBI said, “A PPI issuer shall enable holders of only its full-KYC PPIs to make UPI payments by linking its customer PPIs to its UPI handle. UPI transactions from PPI on the issuer’s application shall be authenticated using the customer’s existing PPI credentials. Such a transaction will, thus, be pre-approved before it reaches the UPI system. A PPI issuer, in its capacity as a PSP, shall not on-board customers of any bank or any other PPI issuer.”
“A PPI issuer may also facilitate discovery of its full-KYC PPIs on third-party UPI mobile applications, who, in turn shall enable such PPIs to be linked to their PSP handle/s. Such UPI transactions, from PPIs using third party UPI applications, shall be authenticated using the UPI credentials,” it added.
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How It Helps You
Easier Transactions: Now, if you have money in a digital wallet (like Paytm or PhonePe), you can use it to pay at shops or online without switching between different apps. For example, if you want to pay with your Paytm wallet, you can do so using Google Pay or PhonePe.
More Choices: You can choose your favorite wallet for payments without being limited to a specific app. This means more flexibility in how you manage your money.
Faster Payments: With this change, transactions will be quicker and more convenient. You won't need to worry about which app you have to use for which wallet.
Encourages Digital Payments: As more people start using digital wallets and UPI, it promotes a cashless economy, making transactions safer and more efficient.
How will it work?
PPI issuers have to link their customers' PPIs to their UPI handle in order to allow holders of only their full-KYC PPIs to make UPI payments. The issuer's application will use the customer's current PPI credentials to authenticate UPI transactions from PPI. Therefore, a transaction of this kind will be pre-approved prior to entering the UPI system.
Experts view this development as a crucial step towards creating a more integrated payment ecosystem. The RBI's approach indicates a desire to broaden the accessibility of UPI across various platforms, fostering competition among different payment solutions. This competition is expected to benefit consumers through improved services and potentially lower fees.
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