A customer uses an Mswipe terminal, operated by M-Swipe Technologies Pvt Ltd., at a clothing store (Photographer: Dhiraj Singh/Bloomberg)

RBI Allows Inter-Operability Among Mobile Wallets But Conditions Apply

The Reserve Bank of India today said that banks and non-banking financial companies should make their wallets interoperable through the Unified Payments Interface within six months, in an attempt to make electronic payments seamless.

Interoperability will, however, only be allowed for wallets which are compliant with know your customer norms, the regulator said as part of its revised master directions for prepaid payments instruments. KYC is a process through which banks and other financial institutions obtain and verify information about customers’ identity and address to ensure services are not misused.

Mobile wallets with up to Rs 10,000 will need to have minimum KYC compared to the earlier limit Rs 20,000, RBI said. Mobile wallets with balance beyond the RBI’s prescribed limit would need full KYC. The regulator has also raised the minimum net worth for a mobile wallet issuer to Rs 15 crore from Rs 5 crore earlier.

“Interoperability shall be enabled in phases for the PPIs,” RBI said. While the interoperability among wallets will be the first phase, the regulator will allow fund transfers between bank accounts and wallets through the UPI platform in subsequent phases, it said in its guidelines.

Presently, some wallets allow transfers to a bank account at an additional charge. However, once the RBI allows for such transfers through UPI, the charges could potentially be removed. This is subject to UPI transactions continuing to remain free.



A sign for PayTM online payment method, operated by One97 Communications Ltd., is displayed at a street stall (Photographer: Dhiraj Singh/Bloomberg)
A sign for PayTM online payment method, operated by One97 Communications Ltd., is displayed at a street stall (Photographer: Dhiraj Singh/Bloomberg)

The move meets a demand of the prepaid payments industry. So far, a wallet of one financial technology company or a bank could not be used to transfer funds to another. Non-bank wallet issuers are only allowed to have a semi-closed wallet where money can flow in through a bank account. Relaxed norms will boost peer-to-peer transactions in India since currently money can only be transferred between two bank accounts.

Also Read: RBI Introduces Caps On Peer-To-Peer Lending

Besides mobile wallets, prepaid payment instruments issued in the form of cards such as gift cards and meal passes will also be allowed to be interoperable in due course, the banking regulator said.

“PPI issuers shall ensure adherence to the technical and operational requirements for such interoperability, including those relating to safety and security, risk mitigation, etc.,” the central bank said.

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