ICICI Bank’s Pockets wallet has become the first financial institution in India to be permitted to offer UPI IDs in its own name and make transactions directly without routing it via a bank account.
So far, UPI IDs were reserved only for those who have an account with any recognized Indian bank, including co-operative banks.
Wallets were not allowed to allocate UPI IDs in their own names so as to prevent money laundering.
Instead, they are forced to tie-up with an approved bank for generating UPI IDs for their customers and are also forced to route all UPI transactions through a bank account.
ICICI Bank said National Payments Corporation of India — the body behind UPI — has issued permission to Pockets to not only offer UPI IDs in its own name, but also to route transactions directly, without any bank account.
So, in addition to making recharges, payments and transfers to other wallet users, Pockets customers can now also make and receive payments to and from any bank account in India.
“New users, including those who are not customers of ICICI Bank, can now instantly get a UPI ID, which is automatically linked to ‘Pockets’. Further, customers who already have a UPI ID, will get a new ID when they log on to the ‘Pockets’ app,” ICICI Bank said.
It was not immediately clear whether NCPI has asked Pockets to carry out more stringent verification of its users prior to allowing them to transfer money via UPI direct from the wallet without using a bank account. Typically, wallets are activated purely based on the verification of a phone number.
ICICI Bank, which operates the Pockets wallet, said the new facility enables users to undertake small value everyday transactions directly from their ‘Pockets’ wallet using UPI in a safe and secure manner.
“It helps them to streamline the number of transactions being undertaken daily from their savings account and thus de-clutter their savings account statement of multiple entries. Further, it expands the convenient usage of UPI to young adults like college students, who may not have a savings account,” the bank said.
Praveena Rai, COO, NPCI said the move will further democratize access to UPI and make it ubiquitous with digital payments by allowing consumers to directly pay through their digital wallets.
“We are delighted to collaborate with ICICI Bank to launch the solution of creating and linking a UPI ID to digital wallet. This initiative UPI is a one-stop solution to payments of all kinds, both P2M and P2P, and this facility will provide an impetus to the burgeoning digital ecosystem in India.”
Pockets is also the only e-wallet that offers a free, physical debit card to its users.
The development could open the door for more such permissions to be issued to other wallet operators like Google Pay, PhonePe and PayTM.
These operators were not allowed to connect their subscriber accounts directly to the UPI payment network. Partly because of this, wallet operators like PayTM even went and acquired a quasi banking licensing.
Others like Google Pay and PhonePe tied up with existing banks, such as HDFC and Yes Bank, to generate UPI IDs for their users and enable them to make and receive payments via the the world’s largest, low-cost payments platform.
As a result, PhonePe and Google Pay users are allocated UPI IDs from various bank suffixes, such as @okicici, instead of @google or @phonepe.
Pockets too used to allocate its users @icici and @icicibank UPI IDs.
With UPI now recognizing Pockets as a legitimate partner, ICICI Bank will now be able to allocate UPI IDs in the name of the app itself (@pockets) instead of in the name of the bank.
Bijith Bhaskar, head of digital channels & partnership at ICICI Bank, said its surveys revealed that users are keen to link their UPI ID with their digital wallet, so that they can directly use the balance in the wallet for smaller transactions while using their savings account only for the larger ones.