Money Transfer Among Different Mobile Wallets Will Soon Be Possible, Thanks To RBI
We all know the advantages of using mobile wallets for making transactions digitally. Mobile wallets companies are pushing their usage very aggressively too, but one thing which was always bothered me about the mobile wallets is their interoperability (compatibility with each other).
RBI (Reserve Bank of India) is now planning to open up the UPI (Unified Payment Interface) framework for these digital wallets. This will make the digital wallets interoperable with each other and will thus allow you to send payments to anyone irrespective to the mobile wallets of their choice.
RBI Will Issue The Guidelines Soon
According to ET, RBI is expected to issue the related guidelines covering interoperability, and KYC (Know Your Customer) shortly for digital wallets companies.
The central bank of the country will also decide about the interchange fees between the wallets for accessing the UPI framework. Currently, the digital wallets can access the UPI framework only via their partner banks for facilitating bank-to-bank transfers. But with access to UPI framework, which should happen within about 2-3 months, the mobile wallets will be able to do bank-to-bank transfers on their own.
“The opening up of the UPI framework and, in turn, the permission to allow interoperability between wallets is something the RBI is looking into very seriously and should be able to activate in 2-3 months,” said a person familiar to the matter.
With UPI access in their kitty, the digital wallet players will get less dependent on the banks, but they will still maintain their partnerships with them as the money transfer and transactions will still occur on underlying bank accounts.
“The bank’s role will continue since these wallet players will also need to hold on to their partnerships for escrow management, settlement and reconciliation, grievance redressal, etc,” said Ritesh Pai, Country Head, Digital Banking, Yes Bank.
It Will Bring More Users Into The Digital Eco-System
This will not only allow you to send money from your Freecharge account to a friend using Paytm, or MobiKwik, but will also convince a greater number of people to use mobile wallets/UPI for making payments.
It will also help mobile wallets grow their business by strengthening their business model.
“(Interoperability) will strengthen the business model of a wallet since the players will not need to acquire both merchants and customers,” said Bhavik Vasa, chief growth officer at payment and wallet company ItzCash.
There has been a slow adoption of UPI-based apps by small and medium-sized banks. On the other hand, digital wallet companies have strong technology teams and innovation, which can bring even more users to the ecosystem.
Flipkart’s UPI-based digital wallet ‘PhonePe’ has more than 10 million downloads on Google Play, whereas Paytm, India’s leading mobile wallet player, has a total user base of 200 million.
In contrast to this, the UPI-based apps of various leading banks like ICICI Bank and SBI have just 5 million and 1 million downloads respectively. BHIM app has been able to get 17 million downloads only due to the high-decibel government campaign to transform India into a digital economy.
“Gradually, the market will start expanding as the ecosystem is built,” he added.
UPI was used to make about 4.2 million transactions worth Rs. 1,660 crore in January 2017 against 261.67 million transactions worth Rs. 8,350 crore done via mobile wallets during the same period.
The transactions increased to Rs. 1,900 using UPI in February 2017, but it is still far behind the number achieved by digital wallets. This can be one of the main reasons why government is fast-tracking the process of opening up UPI for digital wallets.
We will keep you updated as more details come in about this. Stay tuned!