The Reserve Bank of India (RBI) has introduced a major update for UPI transactions. It now allows interoperability of prepaid payment instruments (PPIs) through third-party application providers (TPAPs).
Previously, UPI payments were interoperable only through TPAPs for fund transfers. However, PPI-based transactions, like those involving digital wallets, worked only within the issuer’s system.
In a statement, the RBI said, “UPI payments from/to full-KYC PPIs will now be enabled through third-party UPI applications.” This means PPI holders can send or receive UPI payments using apps that didn’t issue their wallets.
Earlier, transactions between two wallets required both parties to use the same TPAP. With this change, users can transfer or receive funds across wallets, enhancing flexibility.
The RBI’s revised guidelines mandate PPI issuers to link full-KYC wallets with UPI handles for seamless payments. However, PPI issuers acting as payment service providers (PSPs) cannot onboard customers of other banks or PPI issuers.
This move aims to make digital payments more accessible and interoperable, benefiting users and promoting smoother transactions.
