RBI’s New UPI Rule: Game-Changer for Digital Wallet Users

The Reserve Bank of India (RBI) has introduced a major update to enhance digital payments in India. Users of prepaid payment instruments (PPIs), like mobile wallets, can now access UPI services through third-party apps. This move aims to make digital transactions more seamless and interconnected.

                           

UPI vs. Mobile Wallets

Unified Payments Interface (UPI) allows direct bank-to-bank transfers through apps like Google Pay or BHIM. Users can send money via mobile numbers or QR codes, offering a quick and convenient way to transact.

PPIs, on the other hand, are preloaded wallets like PhonePe or MobiKwik, where money is stored and used for transactions within the same platform. These wallets lacked interoperability, meaning users couldn’t transfer money to other wallets or platforms directly.

 

The New Rule Explained

RBI’s latest decision introduces interoperability for PPIs, bridging the gap between wallets and UPI. For example, a MobiKwik user can now make UPI payments through apps like Google Pay or PhonePe, and vice versa. This integration allows wallet users the same flexibility as UPI-linked bank accounts.

 

Impact on Digital Payments

Previously, only certain wallets offered limited UPI functionality, but it was restricted to the app provided by the wallet provider. Now, with the rollout of third-party access, digital wallets will function like bank accounts, making transactions across platforms smoother and more convenient.

 

Why It Matters

The change levels the playing field for wallet users, giving them greater freedom to use any UPI-enabled app. This move not only simplifies payments but also strengthens India’s digital payment ecosystem, paving the way for wider adoption of cashless transactions.