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The Reserve Bank of India (RBI) has approved a new facility related to UPI transactions. RBI allowed holders of prepaid payment instruments to make and receive UPI payments through third-party mobile applications. According to PTI news, the Reserve Bank in its circular said that it has decided to enable UPI payments from prepaid payment instruments with full KYC through the Unified Payment Interface i.e. third party UPI applications.
RBI said this regarding the facility
RBI has said that issuers of prepaid payment instruments will be able to make UPI payments only to their fully KYC prepaid payment instrument holders by linking their customers’ prepaid payment instruments to their UPI handles. Such transactions will be pre-approved before reaching the UPI system. The central bank said prepaid payment instrument issuers, as payment system providers, should not include customers of any bank or any other prepaid payment instrument issuer.
Prepaid payment instrument holders will get more flexibility
The Reserve Bank of India’s decision aims to provide greater flexibility to holders of prepaid payment instruments such as gift cards, metro rail cards and digital wallets. Currently, UPI payments can be made to/from bank accounts using that bank’s UPI application or a third party application provider. However, UPI payments to/from prepaid payment instruments can only be made using the mobile application provided by the prepaid payment instrument issuer.
prepaid payment instruments
UPI (Unified Payments Interface) is an instant real-time payment system developed by National Payments Corporation of India to facilitate inter-bank transactions through mobile phones. Prepaid payment instruments (PPIs) are instruments that enable the purchase of goods and services, management of financial services and money transfer facilities against the value stored in them.
