Cash is back in India with the interoperability of mobile wallets

Mobile wallets are just one of the several prepaid payment instruments available in India

Mobile wallets have made life more comfortable. But what could make them better would be the ability to transfer money from one mobile wallet to another (i.e. interoperability).

Mobile wallets are just one of the several prepaid payment instruments (PPIs) available in India. PPIs enable the purchase of products, facilities, financial services, payment facilities, etc.

Proposed road map

The proposed interoperability was welcomed enthusiastically, but it will apply only to KYC-compliant wallets. The central bank aims to offer interoperability in three phases.

In the first phase, wallet issuers (i.e. banks and non-banks) will make all KYC-compliant wallets interoperable using the Unified Payments Interface (UPI) within six months since the mandate’s release. 

In the second phase, transactions between bank accounts and wallets through UPI will be allowed. This will let you re-transfer money from your wallet to your bank account without extra charges. 

In the third phase, interoperability for wallets issued as cards will be allowed, but banks may still issue prepaid instruments in partnership with authorized card networks. Wallets issue cards and usually tie up with banks, just like ItzCash. 

Increased use of wallets

The new directions from the RBI will make wallets mainstream. The issuers and service providers will no longer work in silos. MobiKwik co-founder and CEO Bipin Preet Singh said:

“There will be a considerable growth in the user base. Wallets will not be limited to their merchant network alone […]. For the consumer, this means they don’t have to set up another wallet account if they already have one.”

Cons of PPI interoperability
 

Not everything is hunky dory with the new directions.

Focus on UPIs

UPI is the default payment option that connects banks and wallets, and the new mandate will bring added emphasis on UPIs as a mode of transaction. 

This is an edited excerpt from Tech In Asia. You can read the original article here