A Boost for Paytm and Digital Payments?
The Reserve Bank of India (RBI) has recently proposed a new policy that will allow Prepaid Payment Instruments (PPIs) to be linked through third-party UPI applications, enabling PPI wallet holders to make UPI payments more conveniently. This move is expected to enhance customer convenience and boost the adoption of digital payments for small value transactions.
Currently, UPI payments from bank accounts can be made using a bank’s UPI application or any third-party UPI application. However, PPI wallet holders can only make UPI transactions using the web or mobile application provided by the PPI issuer. By permitting the linking of PPIs through third-party UPI applications, the RBI aims to provide more flexibility to PPI wallet holders in making UPI payments.
This policy change is likely to benefit One97 Communications, the parent company of Paytm, as it is expected to allow Paytm users to make UPI payments from their Paytm wallet via the Paytm application, rather than through Paytm Payments Bank. This development comes after the RBI asked Paytm Payments Bank to wind down its operations, effective March 15, 2024.
The acquisition of the TPAP (Third Party Application Provider) license from NPCI by Paytm is crucial in this context, as it allows Paytm to operate as a third-party UPI application provider, thereby enabling its users to make UPI payments from their Paytm wallet.
Also Read: UPI Transactions Surge: India Digital Payments Report H2 2023
Overall, the new RBI rule is expected to enhance customer convenience, boost the adoption of digital payments for small value transactions, and promote competition in the digital payments ecosystem.
RBI’s decision to allow UPI payments from PPI wallets via third-party apps is a significant step towards enhancing the convenience and accessibility of digital payments. This policy change is expected to benefit both consumers and digital payment providers, particularly Paytm, by providing more flexibility and convenience in making UPI transactions.
Read More:
- Has RBI’s New PPI Directive Given Another Blow To The Fintech
- New UPI rules for access for prepaid instruments: Now, transfer money
- How UPI And PPI Are Impacting The New Age Companies In India
- RBI allows banks, non-banks to issue PPIs to commuters for public transport
- RBI to allow UPI payments from PPI wallets via third-party apps; may benefit Paytm
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