RBI enables UPI transactions for full-KYC PPI users via third-party apps

According to the RBI circular, “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,” reported PTI.

This decision is designed to enhance convenience for PPI holders, such as users of gift cards, metro cards, and digital wallets, allowing them to perform seamless UPI transactions via third-party applications.

These transactions will require pre-approval before processing through the UPI system.

The RBI has further clarified that PPI providers, acting as payment facilitators, must not register customers associated with banks or other PPI issuers.

Previously, UPI transactions involving PPIs were limited to the mobile applications of the respective PPI issuers.

Bank account-linked UPI transactions, however, could already be conducted through either the bank’s UPI app or third-party platforms.

UPI, developed by the National Payments Corporation of India (NPCI), operates as a real-time payment system enabling mobile-based interbank transfers.

What are PPIs?

PPIs function as payment instruments that allow users to purchase goods and services, access financial services, and transfer funds based on the stored value in the instrument.

What are Full-KYC PPIs?

Banks and non-banking entities issue full-KYC PPIs after completing Know Your Customer (KYC) verification.

These instruments can be used for purchasing goods and services, transferring funds, or withdrawing cash, as per RBI guidelines.