The Reserve Bank of India released revised guidelines for operating wallets in India, the biggest highlight being interoperability among them. This essentially means a user can transfer money across wallets (transfer from Paytm to Mobikwik). The wallets, however, should be compliant to Know Your Customer (KYC) norms.
The interoperability will be done in three phases. The first would allow users to interoperate between various wallets using UPI, this has to be done by the companies within six months. In the second phase, there will be interoperability between the wallets and banks. This will be free of cost. Currently, to transfer money from a wallet back to the bank account, companies will charge 4 percent. In the final phase, there will be interoperability between wallets in the form of physical cards.
“New guidelines will introduce greater flexibility and is a right step forward for increasing digital transactions and provide greater relief to the end users who often use multiple wallets,” says DD Mishra, research director, Gartner.
· Minimum balance for no KYC customers reduced to Rs 10,000 from Rs 20,000.
· Interoperability among wallets allowed using UPI.
· Any new wallet has 12 months to upgrade full KYC, existing wallets need to updated by December 31.
Along with this, the process of using the wallets becomes easier as well. Typically, a user downloads multiple wallets to take advantage of various offers provided by the company. On the merchant side, companies tie up with different wallet providers to give their customers multiple options to pay with. Interoperability ensures that a consumer’s money is not locked within a wallet and has the option to use it across wallets by transferring it.
“It makes it easier for consumers and businesses to make and accept payments. The opportunities are more compared to closed loop systems. Further, the guidelines of KYC will help in fraud detection and fake wallet transaction,” adds Mishra.
Usage of wallets grew last year post-November when demonetization was announced. However, currently with a pull-back on offers and cash back, the numbers have gone lower. Also, industry experts are betting more on UPI as an easier method to transfer money.
Even wallet players in the industry believe that interoperability is a good move by the RBI.
“In terms of interoperability, it really makes the payment system the way it should be. Anyone should be able to pay anyone as long as they have money. However, the current scope is fairly latent we hope that is expanded as we go and also sooner than later,” says Ramki Gaddipati, chief technology officer and co-founder, Zeta.
Gaddipati adds that by virtue of wallets being on UPI it essentially means that anyone and everyone on the UPI network will be able to use any of the wallets. “The intent of the new guidelines are clearly to create a foundation of UPI,” Gaddipati adds.