The Reserve Bank of India(RBI) in its monetary policy committee(MPC) meeting said that now individuals can make payments from prepaid payment instruments like digital wallets using UPI that too through any third party app.
The step would provide Prepaid Payment Instrument(PPI) wallet holders with more flexibility in making UPI Payments.
Currently, UPI Payments from bank accounts can be initiated either by linking a bank account through the UPI application provided by the respective bank or by using any third-party UPI application.
This convenience however, has not been extended to PPI’s. Presently, users can only make UPI transactions using the web or mobile application provided by the PPI User.
Governor Shaktikanta Das emphasized the potential benefits of this proposal, stating, “This will enhance customer convenience and boost adoption of digital payments for small value transactions”
This proposed move in anticipated to particularly benefit One97 Communications, the parent company of leading digital payment platform Paytm. If implemented, it would enable Paytm users to make UPI payments directly from their Paytm wallets via the application, rather than through Paytm Payments Bank, according to market analysis.
This development comes in the wake of recent regulatory changes affecting Paytm. Following, directives from the RBI, Paytm Payments Bank was instructed to cease operations effective March 15,2024.
Consequently, Paytm managed to secure the TPAP(Third Party Application Provider) license from the National Payments Corporation of India(NPCI).
The PPI license is held by the payments bank rather than the parent company, which has prompted Paytm to explore alternative avenues for it’s digital payment offerings.
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