Summary:

The Reserve Bank of India (RBI) has permitted the use of third-party applications for UPI access to prepaid payment instruments (PPI). Previously, UPI payments between bank accounts could be made using either the bank's app or third-party apps. However, UPI transactions from or to a PPI could only be processed through the issuer's app. The RBI’s April 5, 2024 announcement permits full-KYC PPIs to conduct UPI transactions through third-party applications, providing greater access.

The RBI emphasized that only full-KYC PPIs can use third-party UPI apps, with issuer apps validating transactions using customer PPI credentials. Before transactions can be processed via UPI, they must be pre-approved. PPI issuers cannot onboard customers from other banks or PPIs, but they can help users discover their full-KYC PPIs on third-party apps, enabling connection to UPI handles. Third-party UPI apps will allow users to transfer and receive funds in wallets such as Paytm or Google Pay.

Source: IBEF

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