In a move that will make mobile wallet to mobile wallet transactions a reality, the Reserve Bank of India said on Wednesday that interoperability amongst KYC compliant Prepaid Payment Instruments (PPIs) will be implemented within six months of the date of issuance of the revised Master Directions. The Master Directions will be issued by the bank on October 11, 2017.
One of the biggest issues with digital payments has been the fact that a mobile user wallet say of Paytm can only transact with another Paytm user and not with a MobiKwik or a FreeCharge user. With these guidelines coming in place in six months, inter wallet transactions will become possible. With the interoperability of wallets, one can easily transfer money between wallets so that it can be used where required.
The Central Bank stated, “In line with the Vision for Payment and Settlement Systems in the country, the revised framework will pave the way for bringing interoperability into usage of PPIs.”
The move will benefit not only wallet users but thousands of merchants as well that have adopted the digital mode of receiving and making payments.
The Reserve Bank had issued guidelines for issuance and operations of PPIs in April 2009 in order to foster an orderly development of the PPI ecosystem. A draft of Master Directions on the subject was placed in the public domain for comments on March 20, 2017. A six-member Monetary Policy Committee (MPC) of Reserve Bank of India, headed by Governor Urjit Patel, stated that on the basis of the feedback received, it has decided to rationalise the operational guidelines with a view to encouraging competition and innovation, and strengthening safety and security of operations, besides improving customer grievance redressal mechanisms.
Bipin Preet Singh, Founder and CEO of MobiKwik stated, “Interoperability was one of the key challenges in increasing the adoption of digital payments in India, and RBI’s latest direction in this regard will provide a homogenous environment for the growth of mobile wallets. For the user, this means that they do not have to download another wallet if they already have MobiKwik. They can pay across the merchant network of any other PPI. This helps us widen our reach and brings enormous value to our business. Collaboration and co-ompetition are going to drive the digital payments industry into its next phase.”
The interoperability between different PPIs will likely boost further usage of digital transactions among users of various wallet players such as Paytm, Freecharge, and MobiKwik as well as boost the payments space in India, which is projected to reach $500 Bn by 2020, contributing 15% of India’s GDP, as per a recent report by Google and Boston Consulting Group.
(The development was reported by ET)