Cash withdrawals (to a limit) are also now permitted from non-bank wallets or PPI issuers in what Das calls a confidence- building measure.
The RBI has made interoperability mandatory in a move that would bring digi wallets on par with traditional bank accounts in terms of services offered.
Full KYC (know your customer) prepaid payment instruments (PPIs) are covered by the mandate.
RBI governor Shaktikanta Das had expressed disappointment since industry players were given the onus in 2018 to transition to interoperability. Yet they had made no such move on their own.
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Interoperability and PPI Explained
Interoperability, in simple terms, means that customers who have completed full KYC will be able to transfer funds to beneficiaries of other PPIs or banks.
PPis or Prepaid Payment Instruments allow one to buy goods and services such as financial services and remittance facilities using the balance or value stored therein.
Other Features Announced And Their Benefits
In an incentive to complete the migration to full KYC, the outstanding balance limit for an account in a payments bank has also been doubled to Rs 2 lakh
Cash withdrawals (to a limit) are also now permitted from non-bank wallets or PPI issuers in what Das calls a confidence- building measure.
This move puts non-bank PPI issuers and banks on a level playing field.
It is also a pro-consumer move since they do not need to carry their physical wallets as cash is now just a few clicks away.
Presently, withdrawal facility is restricted to full KYC PPIs that banks have issued through ATMs, and Point of Sale (PoS) terminals- all of which limits cash a customer can carry.
Why RBI Backs Interoperability
Interoperability was backed by the RBI since it would enable optimal utilisation of cards and wallets.
It would also come in handy given the constraint coming from scarcity of acceptance infrastructure i.e. PoS devices, ATMs,and QR codes
Since there was no significant progress made towards the migration, the apex bank has now stepped in and made the move mandatory.
Currently cash withdrawal is limited to full-KYC bank issued PPIs but the new development has extended the benefit of withdrawal from all PPIs.
Security Concerns
There are concerns of data leaks at non-bank PPIs and what the RBI is doing to curb the same.
The payments sector acknowledged that plenty of risks are abound and customers will have to be hypervigilant for frauds.
Wallet providers will have to increase their focus on the ability of their tech infrastructure to be able to tackle such security risks.
Executive Director T Rabi Sankar has said that RBI is always putting the customer’s security first and to that extent it will be establishing the basic minimum norms regarding cybersecurity and related issues.
A Welcome Move
Industry experts are optimistic about the new initiative saying that it would help digital wallets reclaim ground lost to banks given the emergence of Unified Payments Interface (UPI) and the new KYC requirements.
These players used to offer cashbacks which were inadequate. But interoperability will give their services a boost.
They will also now be able to “effectively compete for micro-savings from the under-banked segments” said Ketan Doshi, MD, PayPoint India.
Wallets today are also empowered to provide the same transaction features as conventional bank accounts do.
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