‘Interoperability of digital wallets would increase penetration of digital payments’
New Delhi: With RBI making mobile wallet interoperability mandatory from FY23, the non-bank (prepaid payment instruments) PPI issuers or the digital wallets has been brought at par with traditional bank accounts in terms of services offered with the move enabling much wider usage and penetration of digital payments in the country, experts have opined.
“The RBI has made four key changes that will create a much greater level playing field between bank and non-bank PPI issuers. Yesterday the RBI issued guidelines mandating inter-operability for full KYC wallets (aligned with the framework outlined in its policy statement last month) and increasing the limit from one lakh to two lakhs for these instruments. The RBI has allowed a cash withdrawal facility for all non-bank issued full KYC PPIs and had earlier permitted non-banks to access centralised payment systems such as NEFT and RTGS. These quasi bank payment features will enable much wider usage and penetration of PPIs pushing the growth of digital payments,” said Shilpa Mankar Ahluwalia, Partner-FinTech, Shardul Amarchand Mangaldas & Co.
Interoperability, in simple terms, means that customers who have completed full KYC will be able to transfer funds to beneficiaries of other PPIs or banks. So from wallet service provider like Paytm you can transfer money to day PhonePay and vice-versa.
Moreover, cash withdrawals are also permitted now from non-bank wallets within limits set by the apex bank. RBI has set maximum limit of Rs 2,000 per transaction with an overall limit of Rs 10,000 per month per PPI.
What this means is that cash withdrawal points would substantially increase from the limited option available now in the form of bank ATMs and point of sale (PoS) terminals, said another expert with a leading company consultancy firm.
Currently cash withdrawal is limited to full-KYC bank issued PPIs but the new development has extended the benefit of withdrawal from all PPIs.
During the April 2021 Monetary Policy Committee meeting, RBI had announced that PPIs (prepaid payments instruments) such as digital wallets have to be made interoperable. After the RBI released its Master Directions in October 2017, digital wallets were expected to become interoperable within six months. But the plans were put on hold. Now, it has been mandated for fully know-your-customer (KYC) compliant PPIs.
“It shall be mandatory for PPI issuers to give the holders of full-KYC PPIs (KYC-compliant PPIs) interoperability through authorised card networks (for PPIs in the form of cards) and UPI (for PPIs in the form of electronic wallets). Interoperability shall be mandatory on the acceptance side as well,” the RBI has said in its May 19 notification.
The maximum amount outstanding in respect of full-KYC PPIs (KYC-compliant PPIs) has been increased from Rs 1 lakh to Rs 2 lakh, the notification added.