In a significant decision, the Reserve Bank of India (RBI) has approved the use of third-party Unified Payments Interface (UPI) applications for Prepaid Payment Instruments (PPI) users to make and receive UPI payments. This move, announced in the Statement on Development and Regulatory Policies on April 5, 2024, is set to integrate mobile wallets like Paytm, PhonePe, and Amazon Pay into the broader UPI ecosystem, allowing for smoother transactions. Previously, PPI users could only make UPI transactions through the mobile application of the PPI issuer, such as Paytm or PhonePe Wallet. Now, full-KYC PPIs can facilitate UPI payments using third-party UPI apps like Google Pay, PhonePe, and others.

This change enables PPI holders to transfer and receive money via third-party apps, eliminating the need to use a specific wallet's interface. For instance, users can now send or receive funds to and from their Paytm or Google Pay wallet using any third-party UPI app, such as PhonePe, providing greater flexibility and convenience.

The RBI's move aims to streamline the payment process, enhancing interoperability between mobile wallets and UPI platforms. It allows users to access a broader range of payment interfaces without being restricted to a single app. This will likely boost the digital payment ecosystem, making transactions faster, more seamless, and user-friendly for millions of Indian consumers.