The Reserve Bank of India today announced revised guidelines on the issuance and operation of Prepaid Payment Instruments (PPIs). In the light of the RBI’s notification for PPI, the PCI (i.e. Payments Council of India) has predicted that digital payments in the country could increase by 30%-40% in the coming five years.
PCI is the representative body of PPI issuers operating in the country. The guidelines in question have come into effect from today and the issuers of PPIs will have to comply with these rules on or before December 31, 2017, expect for a few other cases specified.
Welcoming the guidelines set forth by the country’s central banking institution, Payments Council of India Chairman Navin Surya said “This is the third edition of reform in PPI, first one came with allowing non-banks to participate in regulated payment systems, the second one came which allowed domestic remittance from PPIs to Bank Accounts. This third edition is laying the foundation for PPI to become interoperable with all existing payment instruments and in par of acceptance of debit/credit cards in a phased manner.”
The newly-instituted guidelines, Surya believes, would increase the contribution of PPIs towards digital payments from the current share of less than 10% to around 30%-40% within the next five years. He added, “We thank the RBI and their team for laying this foundation and we at PCI would work closely with them to achieve the common objective of driving ‘Less Cash in India’.”
With increased access to smartphones and the Internet, digital transactions in India have undergone dramatic growth in recent years. The launch of the digital stack has resulted in higher domestic remittance limits and allowance of international inward remittance. This has, in turn, enabled players in the space to digitise retail payments which until now were done primarily through cash.
One of the biggest issues with digital payments, however, has been the fact that a mobile user wallet of Paytm can only transact with another Paytm user and not with a MobiKwik or a FreeCharge user. This is where PPI interoperability comes in. With the new guidelines by the RBI in place, interoperability of wallets will soon become possible, allowing users to transfer money between wallets.