UPI Access Opens for Prepaid Wallets: New Rules Explained

Digital payments in India just got smoother! The Reserve Bank of India (RBI) has introduced new rules allowing you to link prepaid payment instruments (PPIs), like digital wallets, to the Unified Payments Interface (UPI) through third-party apps. This means you’re no longer limited to your wallet provider’s app to make UPI payments.The change offers greater flexibility and a more seamless payment experience. No more hopping between apps; now you can use your go-to UPI app like Google Pay, PhonePe, or others to transfer money directly from your favorite digital wallet.

So, how does it work? Here’s a simple guide:

1. Ensure Compatibility: Check if your digital wallet and preferred UPI app support this new integration. Most major players will likely support this feature.
2. Linking Process: Open your chosen UPI app and look for the option to link a PPI or wallet. The process may vary slightly between apps.
3. Select and Connect: Choose your wallet provider from the available list and follow the instructions to link it with your UPI profile.
4. Enjoy Convenient Payments: Now, when you need to make a UPI payment, you can choose your linked prepaid wallet as the payment source within your favorite UPI app.

This change is a win for users, offering ease and choice in how they manage their digital finances. It’s a testament to India’s commitment to driving innovation and accessibility in the fintech space.While the RBI has paved the way, the exact rollout timeframe and step-by-step instructions may depend on individual wallet providers and UPI apps. Keep an eye on updates from your chosen platforms for specific guidance.

Starting January 1, 2024, the Reserve Bank of India (RBI) introduced significant changes to the Unified Payments Interface (UPI) framework, marking a significant shift in the digital payment landscape. These changes, designed to enhance the security, efficiency, and user experience of digital transactions, include several pivotal updates relevant to both consumers and merchants.

Multiple rumours about UPI transaction charges but let me tell you that there will be no charges for UPI transactions linked to bank accounts. It's FREE as before!

This is how 99.9% of UPI transactions happen.

Only PPI Wallets- Prepaid Payment Instruments will attract charges. pic.twitter.com/r97en8GOfw

— Amit Rakksshit 🇮🇳 (Modi ka Parivar) (@amitrakshitbjp) March 29, 2023

One of the key updates is the introduction of UPI ATMs, a revolutionary feature that allows users to withdraw cash using UPI apps without the need for a physical debit card. This move is expected to significantly boost the convenience of accessing banking services across the country. Hitachi Payment Services has taken the lead by providing these UPI ATMs, making cash withdrawal seamless and more accessible, especially in metro cities.

In an effort to combat financial fraud, a new four-hour window for transactions exceeding Rs 2,000 to new recipients has been implemented. This measure aims to give users the ability to modify or reverse transactions, enhancing security for first-time payments and reducing the risk of fraud.A notable regulatory change is the imposition of an interchange fee of 1.1 percent on specific merchant UPI transactions exceeding Rs 2,000, made through prepaid payment instruments (PPI). This fee is intended to balance the transaction ecosystem and ensure fair practices among merchants and users.

Furthermore, the daily transaction limit for UPI payments has been raised to Rs 1 lakh, with a higher limit of Rs 5 lakh for payments made to healthcare and educational institutions. This increase empowers users by facilitating larger transactions, especially in sectors critical to the public.To address the issue of dormant UPI IDs, the National Payments Corporation of India (NPCI) has mandated the deactivation of unused UPI IDs and numbers on platforms like Paytm, Google Pay, and PhonePe, as well as bank accounts that have been inactive for over a year. This proactive measure is aimed at reducing the risk of fraudulent activities and safeguarding the UPI ecosystem.