The Reserve Bank of India on Friday allowed UPI payments from and to verified digital wallets through third-party unified payment interface applications in an effort to achieve interoperability in the ecosystem.
This will enable wallet holders to carry out UPI payments through the mobile application of third-party UPI applications.
Currently, UPI transactions on a bank account can be carried out using the UPI application of that bank or of any third-party application provider. However, UPI transactions through a digital wallet called 'Prepaid Payment Instruments' can only be carried out using the mobile application provided by the PPI issuer.
"... it has been decided to enable UPI payments from / to full-KYC PPIs through third-party UPI applications. This will enable PPI holders to make / receive UPI payments through the mobile application of third-party UPI applications," the RBI said in a circular.
This means that one who uses a mobile wallet to make digital payments, can now access the funds in that wallet through any third-party UPI app.
What Changes
According to revised RBI norms, a digital wallet issuer shall enable holders of only its full-KYC PPIs to make UPI payments by linking its customer wallet to its UPI handle.
UPI transactions from the wallet on the issuer's mobile app shall be authenticated using the customer’s existing wallet credentials. Such a transaction will consequently be pre-approved before it reaches the UPI system. A PPI issuer, in its capacity as a payment service provider, shall not on-board customers of any bank or any other PPI issuer, RBI said.
"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," the central bank said.
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