PSP bank
Also known as: Payment service provider (UPI), sponsor bank, UPI sub-member
Definition
In UPI, a payment service provider (PSP) is the regulated bank that provides the customer-facing UPI app and connects it to NPCI. A sponsor bank is a direct UPI member that brings a smaller bank, called a sub-member, onto UPI through its own membership.
More about PSP bank
Under NPCI's 2016 UPI procedural guidelines (version 1.5), a PSP must be a regulated entity under the Banking Regulation Act, 1949 and be authorised by RBI to provide mobile banking. It provides the app, which uses NPCI's UPI libraries, and must come on board as an issuer rather than only as an acquirer [1].
The same guidelines refer to sub-members that participate through a sponsor bank [1]. Sub-members still need a way to post UPI transactions to their own accounts. Banks should check NPCI's current circulars for today's membership models.
How this relates to LCode Technologies
LCode Technologies' UPI & IMPS Switch includes a Version 2.0 certified UPI switch and PSP app.
Frequently asked questions
What is the difference between a PSP bank and a remitter bank?
The PSP provides the app the customer uses to start or approve a UPI payment. The remitter bank holds the payer's account and is debited. One bank can play both roles, or they can be different entities.
Related reading
Sources
- Unified Payments Interface – Procedural Guidelines, Version 1.5 (July 2016) — National Payments Corporation of India (copy hosted by SLBC Madhya Pradesh)