RBI Issues Guidelines For E-Wallet Interoperability

Among other things, the rules will allow mobile wallets to issue cards in partnership with card networks like Visa.

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(Photo: iStock)

The Reserve Bank of India on 16 October issued final guidelines to enable interoperability for pre-paid instruments or mobile wallets. Among other things, the rules will allow mobile wallets to issue cards in partnership with card networks like Mastercard, Visa.

In 2017, the RBI had said that such interoperability, which allows transfer of funds seamlessly between mobile wallets, would be permitted but operational guidelines were awaited. The rules have now been released, giving a boost to mobile wallet companies, while also reducing the advantage that payments banks enjoyed.

In its guidelines, the RBI said that interoperability will be enabled through both the card networks and the Unified Payment Interface.

• Where PPIs are issued in the form of wallets, interoperability across PPIs shall be enabled through UPI.
• Where PPIs are issued in the form of cards, the cards shall be affiliated to the authorised card networks.
• The interoperability shall be facilitated to all KYC-compliant PPI accounts and entire acceptance infrastructure.

PPI issuers shall adhere to all the requirements of card networks/UPI, including membership type and criteria, merchant on-boarding, adherence to various standards, rules and regulations applicable to the specific payment system such as technical requirements, certifications and audit requirements, governance, etc.

No Minimum Requirement For Interoperability

Contrary to expectations, the RBI didn’t impose any minimum net worth requirement on mobile wallets before permitting them to become interoperable.

According to Bipin Preet Singh, founder and chief executive officer of Mobikwik, the guidelines will give a boost to mobile wallets. He explained that mobile wallet firms can now issue cards directly by collaborating with card networks like Mastercard, Visa and Rupay.

Until now, this could only be done through a tie-up with a bank. In the online segment, mobile wallets can directly issue payment addresses using the UPI network.

This will benefit mobile wallet firms, specially those who have invested in building a network, said Singh.

Interoperability also levels the playing field between mobile wallets and payments banks, in terms of payments. As such the advantage of payments banks narrows to their ability to take small deposits and providing cash out facilities.

In August, PPI transaction stood at 372.94 million in volume and Rs 189.81 billion in value.

‘Very Progressive Move For Non-Bankers’

This is a very progressive move for non-bank players, said Navin Surya, chairman emeritus of the Pyaments Council of India in an emailed statement.

This will allow mobile wallets to take their payment services to the unbanked and put them in the league of debit and credit cards.

“Also now UPI would be accessible to large masses even those who are not banked or are under-banked.”

Navin Surya

(This story was originally published on BloombergQuint)