Fintech

Digital wallets get a makeover for UPI credit

Pratik Bhakta

October 11, 2021 | 9 Min Read

The banking regulator wants credit payments on UPI to be routed through prepaid payment instruments, but teething issues related to bank charges and interchange rates are causing delays in the rollout

Prepaid payment instruments, or digital wallets, are making a quiet comeback to India’s payments ecosystem. The same Unified Payments Interface system that contributed to sidelining digital wallets by making direct debit from bank accounts easy and fashionable is looking at PPIs to enable credit transactions on its rails.

Fintech platforms such as Bullet, Freo and LazyPay were forced to stop offering credit on UPI rails earlier this year because the regulations didn’t allow for such transactions. That’s set to change with the Reserve Bank of India proposing that fintech startups be allowed to route credit on UPI transactions through digital wallets, said two sources aware of the developments.

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