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ARTICLE · 10 JANUARY 2025

RBI Authorizes UPI Transactions For Fully Compliant KYC - PPIs Via Third-Party Apps

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The Reserve Bank of India (RBI) has amended the Master Directions on Prepaid Payment Instruments (PPI) through Notification No. RBI/2024-2025/97, issued on 27 December 2024 (Master Directions).

IndiaFinance and Banking
Harsh Walia
Harsh Walia
Abhinav Chandan
Abhinav Chandan
Rishi Gautam
Rishi Gautam
Sanskriti Shrivastava
Sanskriti Shrivastava
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Introduction

The Reserve Bank of India (RBI) has amended the Master Directions on Prepaid Payment Instruments (PPI) through Notification No. RBI/2024-2025/97, issued on 27 December 2024 (Master Directions). The Master Directions govern the issuance and operations of PPIs, such as prepaid cards and wallets. They categorize PPIs into two types: small PPIs, which require minimal customer details, and full know-your-customer (KYC) PPIs, which necessitate comprehensive KYC verification.

With this amendment, the RBI permits full KYC PPI holders to perform United Payment Interface (UPI) transactions using any third-party UPI application like Google Pay or PhonePe (TPAPs). Consequently, PPI issuers can link their customers' full KYC PPIs to their UPI handles. However, the PPI issuers remain restricted from onboarding customers of other entities, including banks and alternate PPI issuers. This ensures a well-defined operational scope for PPI issuers.

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