Highlights
RBI Enables UPI Transactions via Third-Party Applications for Full-KYC PPI Holders
The Reserve Bank of India (RBI) has announced that holders of full-KYC Prepaid Payment Instruments (PPIs) can now perform Unified Payments Interface (UPI) transactions through third-party applications. This regulation marks a significant shift from previous guidelines, where PPI holders were restricted to using the mobile applications provided solely by their PPI issuers.
Enhancing Interoperability and User Convenience
This change, introduced in April, aims to improve interoperability and user convenience within the digital payment landscape. According to former RBI Governor Shaktikanta Das, this initiative is intended to encourage the widespread adoption of digital payments, particularly for small-value transactions.
Key Regulations for PPI Issuers
The updated regulations require PPI issuers to:
- Enable full-KYC wallet holders to link their PPIs to third-party UPI applications.
- Authenticate transactions conducted via these applications using the existing UPI credentials of the PPI holders.
This streamlining of the payment process is anticipated to propel the use of digital wallets, facilitating seamless financial transactions and underscoring the RBI’s dedication to advancing innovation within India’s payment ecosystem.
Current Market Landscape
Presently, PhonePe leads the UPI applications market, capturing nearly 50% of the share. It is closely followed by Google Pay, which holds 37%, and Paytm with 7%. Additionally, new entrants such as CRED, Navi, and Flipkart’s Super.money have experienced an increase in transaction volumes over the recent months.