RBI Issues Directive To Non-PPI Firms To Halt Co-Branded UPI Service

Mumbai
In a move to regulate prepaid payment instrument (PPI) players and encourage non-PPIs to obtain a license, the Reserve Bank of India (RBI) issued a directive to firms such as DreamX and Fampay to halt their UPI services, which were operated through a co-branded arrangement.
This move restricts co-branded PPI apps, such as non-bank and non-PPI license holders, from offering UPI services on their platform. A PPI is basically an instrument like a wallet or a prepaid card that helps facilitate the purchase of goods and services, including financial services, remittances and fund transfers to family and friends only against the value stored on such instruments.
A company needs to have a PPI license to operate a wallet and a Payment Service Provider (PSP) license to run UPI services. Fintechs that don’t have either of these partner with entities that have these licenses to provide these payment services to their end-customers. RBI seems to be cracking down on these methods.