In October 2017, The RBI Had Also Mandated e-KYC For All Mobile Wallet Users, Leading To A Drop In Transactions
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After the RBI released its Master Directions in October 2017, digital wallets were expected to become interoperable within six months. However, owing to ongoing discussions with industry stakeholders, the plans were on hold for a while. However, now things are beginning to move again and the RBI might release mobile wallet interoperability rules in about a month. There has been a delay of two months after the deadline.
An ET report cited bankers in the know as saying, “The National Payments Corporation of India (NPCI) has already cleared the safety and security aspects of taking wallets onto the interoperable platform. The RBI is ironing out a few final issues before releasing operational guidelines; this is expected to happen within a month from now.”
Further, the report added that once mobile wallets enable the mandatory know your customer (KYC) requirements for their users, the RBI would just be waiting to get all the players to develop similar technical capabilities.
A Step Ahead On Interoperability Of Wallets
With these guidelines coming in place, 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. Prepaid cards are also expected to be made interoperable as part of this process.
Further, full KYC and proper identification of users is one of the essential criteria for the wallet interoperability proposition.
On October 11, 2017, the RBI had issued the Reserve Bank of India (Issuance and Operation of Prepaid Payment Instruments) Directions, 2017 (Master Directions), making KYC compliance mandatory for prepaid payments instruments (PPI) such as wallets by February 28, 2018.
Impact Of RBI’s New Regulations On E-Wallet Industry
In April 2018, reports had surfaced that as per industry estimates, there had been an 80% to 90% fall in the number of digital wallet users and this was largely a result of most customers shying away from full KYC authentication.
Further, new RBI data revealed that mobile wallet transactions fell 13% to 268.79 Mn in March from 310.01 Mn in February, and the total transaction value of mobile wallets dropped 23% to $1,482 Mn (INR 10,000 Cr) from $1,941.6 Mn (INR 13,100 Cr) in the same period.
According to the RBI’s earlier data, transactions worth $2 Tn (INR 131.95 Tn) were carried out on mobile wallets in January 2018, as compared to $1.9 Tn (INR 125.51 Tn) in December 2017.
Google and the Boston Consulting Group estimated that the digital payments sector of India is set to reach $500 Bn by 2020, contributing 15% of India’s GDP. Further, a report by Credit Suisse predicts that the market, which is currently worth around $200 Bn, is expected to grow five-fold to reach $1 Tn by 2023.
With multiple players like Paytm, Google Tez, PhonePe etc leading the baton of digital payments in India, the mobile wallet interoperability guidelines are bound to enable several smaller players to strengthen their game.
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