Digital payment wallets will be interoperable: RBI's mandate decoded

With the proposed system, digital wallet providers and participants (merchants and users) will be able to settle transactions across all systems in a unified way.

RBI recently released a notification that describes the central bank's plan on achieving interoperability among prepaid payment instruments (PPIs) or e-wallets.

With the proposed system, wallet providers and participants (merchants and users) will be able to settle transactions across all systems in a unified way.

According to RBI, the guidelines on the interoperability among PPIs will be introduced in a phased manner. 

How RBI plans on implementing interoperability

RBI plans on achieving interoperability among PPIs with unified payments interface (UPI), which many of the major wallet players have already deployed. RBI will then introduce a mandate to ensure interoperability between e-wallets and bank accounts through UPI. The last phase will be focused on establishing interoperability between payment cards and PPIs by working with card processing companies. 

"As per the road-map laid down therein, interoperability of all KYC-compliant PPIs was to be enabled in three phases - (i) interoperability of PPIs issued in the form of wallets through Unified Payments Interface (UPI), (ii) interoperability between wallets and bank accounts through UPI, and (iii) interoperability for PPIs issued in the form of cards through card networks," states the notification.

How interoperability affects merchants and end users

The good news for merchants is that if they have signed up for a particular wallet with full KYC, they will not be required to register with other wallets in order to receive payments from consumers. For end users, they will be able to seamlessly transfer funds across all the wallets, and will no longer need to manage multiple wallet apps on their devices.

So, if a user has Mobikwik installed on his phone, the user can transact successfully with a merchant that has a Paytm wallet, provided there is full KYC done with both wallets. 

"In order to prepare better for implementation of interoperability, consolidated guidelines for enabling all phases are enclosed. Participating PPI issuers, who choose to adopt interoperability shall ensure adherence to the enclosed guidelines, in addition to the instructions on KYC, security for transactions and application life cycle, cyber security, fraud prevention and risk management," the notification states.