RBI: The Reserve Bank of India (RBI) has offered a significant benefit to holders of prepaid cards. In fact, the Reserve Bank has permitted the making and receiving of UPI payments via third-party mobile apps.
What is prepaid card?
We would like to inform you that this choice by the Reserve Bank will offer greater ease to the users of prepaid payment instruments (PPI) such as gift cards, metro rail cards, and digital wallets.
PPIs are tools that facilitate the buying of goods and services, executing financial transactions, and providing remittance options using the stored value within them. UPI, in contrast, is a real-time instant payment system created by the National Payments Corporation of India to enable inter-bank transactions via mobile devices.
The Reserve Bank announced in the circular that it has chosen to facilitate UPI payments from fully-KYC PPIs via third-party UPI applications. Likewise, PPIs will be authorized to accept UPI payments.
PPI issuer will allow UPI payments
The RBI stated that a PPI issuer will allow UPI payments exclusively for its full-KYC PPI customers by associating them with a UPI handle. UPI transactions initiated from PPIs on the issuer’s app will be verified using the customer’s current PPI identity. This indicates that these transactions will receive prior approval before entering the UPI system.
What has RBI informed?
The RBI stated that as a provider of payment systems, a PPI issuer must not link customers from any bank or any other PPI issuer to itself. Currently, UPI payments from a bank account can be processed through the UPI app of that bank or via any third-party application. Nonetheless, UPI payments from PPI can only be executed through the mobile app offered by the PPI issuer.