RBI to allow UPI payments from PPI wallets via third-party apps; may benefit Paytm
Reserve Bank of India has proposed to permit the linking of Prepaid Payment Instruments (PPIs) through third-party UPI applications, thus allowing PPI wallet holders more flexibility to make UPI payments.
At present, UPI payments from bank accounts can be made only by linking a bank account through the UPI application of the bank or using any third-party UPI application. However, the same facility is not available for PPIs, and wallet holders can make UPI transactions only by using the web or mobile application provided by the PPI issuer.
“This will further enhance customer convenience and boost adoption of digital payments for small value transactions,” Governor Shaktikanta Das said.
The move is seen benefitting One97 Communications, the parent company of Paytm, as it is likely to allow its users to make UPI payments from the Paytm wallet via the Paytm application instead of Paytm Payments Bank, according to market participants.
Paytm managed to secure the TPAP (Third Party Application Provider) licence from NPCI after the RBI asked Paytm Payments Bank to wind down operations effective March 15, 2024. The PPI licence is with the payments bank and not with the parent company.