RBI to allow 3rd-party apps for UPI payments via PPI wallets

The Reserve Bank of India (RBI) has proposed to permit the linking of prepaid payment instruments (PPIS) with third-party unified payments interface (UPI) applications to make the digital wallet market interoperable.

- AJINKYA KAWALE

The move, outlined in the RBI's statement on developmental and regulatory policies, means wallet holders will no longer have to depend on PPI wallet issuers to make UPI payments. Individuals will be able to link their PPI wallets to third-party apps to conduct these transactions.

Currently, PPI wallets can be used to make UPI transactions only through the application provided by the PPI issuer.

RBI Governor Shaktikanta Das said this move would boost adoption of digital payments for small value transactions.

Analysts suggest the proposal would democratise the wallet market.

"At the moment, the wallet market had been thrown wide open due to the RBI diktat on Paytm Payments Bank. The guideline, in a sense, serves to make PPI wallets somewhat interoperable and democratises the wallet market to that extent," said Shivaji Thapliyal, head of research and lead analyst, YES Securities.

The RBI will later issue instructions related to UPI access for PPIs through third-party apps.