Reserve Bank of India (RBI) has announced new guidelines to enhance interoperability of full-KYC Prepaid Payment Instruments (PPIs) with Unified Payments Interface (UPI) through third-party applications. Previously, UPI transactions involving PPIs could only be conducted via the PPI issuer’s mobile application. Now, holders of full-KYC PPIs can perform UPI payments using third-party UPI apps. Revised provisions mandate that PPI issuers can link their full-KYC wallets to UPI handles on third-party apps, enabling broader usage while maintaining security protocols. Transactions will be authenticated using UPI credentials for third-party apps and existing wallet credentials for issuer apps. The guidelines also prohibit PPI issuers, acting as Payment Service Providers (PSPs), from onboarding customers of other banks or PPI issuers. These changes, under the Payment and Settlement Systems Act, 2007, are expected to enhance user convenience and expand the reach of digital payment systems in India.
Reserve Bank of India
RBI/2024-2025/97
CO.DPSS.POLC.No.S972/02-14-006/2024-25
December 27, 2024
All Prepaid Payment Instrument Issuers (Banks and Non-banks),
National Payments Corporation of India (NPCI) and System Participants
Madam / Dear Sir,
Unified Payments Interface (UPI) access for Prepaid Payment Instruments (PPIs) through third-party applications
Currently, UPI payments from / to a bank account can be carried out using the UPI application of that bank or of any third-party application provider. However, UPI payments from / to a PPI can only be carried out using the mobile application provided by the PPI issuer.
2. As announced in the Statement on Development and Regulatory Policies dated April 05, 2024, it has been decided to enable UPI payments from / to full-KYC PPIs through third-party UPI applications. This will enable PPI holders to make / receive UPI payments through the mobile application of third-party UPI applications. The relevant provisions have been amended in Master Directions CO.DPSS.POLC.No.S-479/02.14.006/2021-22 dated August 27, 2021 on Prepaid Payment Instruments (MD-PPIs) (see Annex).
3. This circular is issued under Section 18 read with Section 10(2) of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007).
Yours faithfully,
(Gunveer Singh)
Chief General Manager-in-Charge
Annex
Revised provisions of the MD-PPIs:
Requirements for achieving interoperability through UPI
| Previous instructions | Revised instructions |
| 11.6.3. PPI holders shall be on-boarded for UPI by their own PPI issuer only. PPI issuer shall only link its customer wallets to the handle issued to it. PPI issuer as PSP shall not on-board customers of any bank or any other PPI issuer.
11.6.4. Authentication shall be completed by the PPI holder as per her / his existing wallet credentials. In other words, a transaction will be pre-approved before it reaches the UPI. |
11.6.3. A PPI issuer shall enable holders of only its full-KYC PPIs to make UPI payments by linking its customer PPIs to its UPI handle. UPI transactions from PPI on the issuer’s application shall be authenticated using the customer’s existing PPI credentials. Such a transaction will, thus, be pre-approved before it reaches the UPI system. A PPI issuer, in its capacity as a PSP, shall not on-board customers of any bank or any other PPI issuer.
11.6.4. A PPI issuer may also facilitate discovery of its full-KYC PPIs on third-party UPI mobile applications, who, in turn shall enable such PPIs to be linked to their PSP handle/s. Such UPI transactions, from PPIs using third party UPI applications, shall be authenticated using the UPI credentials. |
