By Elton Gomes
The Reserve Bank of India (RBI) on Tuesday released final guidelines enabling interoperability within pre-paid instruments or mobile wallets. In other words, a MobiKwik wallet user will be able to send money to a Paytm user.
In 2017, the RBI had that it would permit interoperability, however it did not release any specific guidelines. The new guidelines could be seen as a boost to mobile wallet companies, while they could reduce the advantage enjoyed by payments banks.
What are the RBI’s guidelines?
In a circular released on Tuesday, the apex bank released consolidated guidelines wherein all phases will prepare wallets for interoperability.
RBI clarified that all forms of wallet interoperability will be done through Unified Payments Interface (UPI) and cards through the interoperable card networks.
To ensure that all such transactions are secure, RBI has mandated all PPI (prepaid payment instruments) issuers to adhere to all security guidelines laid out by the National Payments Corporation of India (NPCI) for UPI and card networks in terms of merchant onboarding. Interoperability will be made available only for complete KYC wallets.
“This will enable players to start issuing payment instruments from card networks (RuPay/Visa/MC) which will be accepted across both physical merchant locations through PoS Teeminal or through Bharat QR code and there is no need for us to onboard merchants separately. Also through BHIM UPI, there will be free two-way flow of funds between wallet and bank accounts,” Sunil Kulkarni, joint managing director of Oxigen Services, told the Economic Times.
The RBI has not made interoperability mandatory for the players. The apex bank has not yet issued a timeline as to when can the wallets be interoperable. However, banking sources claim that the first round of interoperability could begin within two months.
How will interoperability work
Kulkarni added that after the norms come in, users with different mobile wallets can make seamless transactions across any digital wallet. In addition, there will be a free flow of money from wallets to banks and vice-versa through UPI.
Kulkarni asserted that customers need not worry about losing money in their wallet. He said, “A customer need not worry about losing their money in any particular wallet. Besides, wallets can issue debit cards by collaborating with any card network and these cards can be used for offline purchases,” Business Line reported.
How will the e-wallet industry be affected
Digital wallet players have expressed confidence that the guidelines will propel the PPI or the wallet industry. Sources said that four to five digital wallet firms are already involved in a testing phase to transfer money between each other.
Naveen Surya, chairman emeritus of industry body Payments Council of India, said that the prepaid industry could easily grow by five times in two to three years due to interoperability.
India’s UPI could get a further push with interoperability. A.P. Hota, former managing director & CEO, NPCI, said, “Wallet interoperability is a much-awaited step in the right direction. A phased approach is necessary for regulated growth of the sector,” Business Standard reported.
The final stage of interoperability will allow wallets to issue cards by partnering with card networks like Visa, Mastercard, or RuPay. This will eliminate the need of a partner bank. PPI players have said that the move will boost both wallets and cards – both of which have recorded significant growth against India’s ambitions to enhance its digital payments space.
Elton Gomes is a staff writer at Qrius
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