Published 18:34 IST, December 27th 2024
Prepaid Wallets For UPI Transactions? RBI's New Rule Explained
RBI's new rule lets users link their prepaid wallets to any UPI app, making payments more flexible and convenient.

New UPI Rule: The Reserve Bank of India (RBI) has announced a new update that will make it easier for people to use Prepaid Payment Instruments (PPIs) like mobile wallets for UPI payments through third-party apps (like Google Pay, PhonePe, etc.).
Currently, if you want to make a UPI payment from a PPI (like your mobile wallet), you can only use the wallet’s own app. But now, the RBI is allowing PPI holders to use third-party UPI apps for transactions.
For example if you have a Paytm wallet (a PPI) and you want to make a UPI payment. Right now, you could only do this through the Paytm app. But with the new RBI rule, you’ll be able to use other UPI apps like Google Pay or PhonePe to make the payment using your Paytm wallet.
What’s the benefit?
This means that if you have a full-KYC (Know Your Customer) verified PPI, you will be able to link your PPI to third-party UPI apps, allowing you to send and receive UPI payments without needing to go back to the wallet app.
How does it work?
PPI and UPI link
The PPI issuer (like Paytm, PhonePe, etc.) will link your wallet to its UPI handle. This is done through its own app, and you will continue to use your existing wallet credentials to authenticate the transaction.
Third-party apps
If you use a third-party app like Google Pay or PhonePe, your PPI issuer will make sure your wallet is discoverable on those apps. You will be able to link your PPI to these apps and make payments.
Authentication
Just like with UPI transactions from a bank account, your wallet transactions will be securely authenticated with your existing wallet login details.
Keep this in mind
- Only full-KYC PPIs will be allowed to use this feature. This means you must have completed the full verification process to be eligible.
- The PPI issuer (like Paytm or PhonePe) will still only link your wallet to its own UPI handle. You can’t link someone else’s wallet or a bank account.
Updated 18:34 IST, December 27th 2024