The RBI has decided to allow payments from one Mobile Wallet to another by facilitating inter-operability within six months.
Reserve Bank of India (RBI) allowing inter-operability among prepaid payment instruments (PPIs). PPIs which include the likes of ewallets, gift cards and meal coupons are used as substitutes for cash.
The central bank, however, has incorporated a rider that the facility will be allowed only for KYC compliant users, which is a small proportion of the overall user base. The RBI is expected to revise its norms for inter-operability by October 11.
The development comes at a time when digital payments in India are moving towards payments platforms like unified payments interface (UPI) where money need not be locked in a wallet. UPI enables transfers directly from a bank account.
So far, leading wallets like Paytm, Freecharge and Mo bikwik operate in a closed loop structure where the money movement is restricted within the network of a mobile wallet. After demonetisation, digital payments saw a sudden spike in wallet usage but cash usage is almost back to pre-demonetisation levels as cash is back in the market.Moreover, options such as net banking, debitcredit cards are being preferred for digital payments. The RBI measure is not seen to be providing a major boost to wallet players. “First, the base of KYC compliant users even for the largest player like Paytm would not be more than five million which includes the merchants as well. Second, the wallet users are changing their loyalty based on the amount of discounting. So this new move might not have a huge impact on the ecosystem,“ said Arnav Gup ta, analyst at Forrester Research.
Digital wallets, backed by venture capital money , have been offering discountscashback to users to open accounts with them. Alibaba-backed Paytm has been leading the front in this space on the back of funding from Alibaba and SoftBank. Companies like Mobikwik and Freecharge too have taken similar approach for customer acquisition.