The days when you had to rely on multiple e-wallets to get simple everyday tasks done are gone! You have PayTM and your friend has MobiKwik? No problem! With Reserve Bank of India’s (RBI) latest guidelines on prepaid payment instruments (PPIs), people will soon be able to transfer money directly from one e-wallet to another.
RBI has not made the interoperability mandatory so far, and no final timings for the interlinking has been given. However, many expect the first stage to be rolled out in the next two months. Let’s see how this new declaration will affect our economy in the days to come.
What do the RBI guidelines say?
The interoperability will only be available for fully KYC (Know Your Customer) complying e-wallets. In simple words, interoperability (in this context) is a technical ability that allows a payment system to be used in conjunction with other payment systems. Once operational, the system will enable you to seamlessly transact through digi-wallets. Here are a few salient features:
- Using Unified Payments Interface (UPI), interoperability between bank account and e-wallet, among e-wallets will be enabled.
- The first phase would facilitate interoperability of all the KYC complying digi-wallets.
- In the second phase, bank accounts will be linked.
- The third and final phase will allow e-wallets to issue cards of their own, by collaborating with companies like Visa, MasterCard etc.
Something for everyone
It’s being said that interoperability is all set to change the monetary world soon, not with a lot of exaggeration. Once in place, the interlinking will empower more than one segment of the economy.
For the customers: Acting as a big step forward towards a digital economy, the guidelines will enable customers to have smoother transactions. Reducing the need for people to head over to ATMs or banks, this will promote faster and easier transactions.
For businesses: Receiving payments will become significantly easier for small and large-scale businesses alike. There would be lesser need for cumbersome bank formalities, with money now easily transferable from one e-wallet to another, or even to a bank account.
Talking about the future possibilities, the RBI has said that “PPI issuers operating exclusively in specific segments like Meal, Gift and MTS may also implement interoperability.”. Therefore, we can expect to see further dimensions added to the system.
Are e-wallets now equivalent to banks?
With the announcement by RBI, several curiosities have come up, raising their hands with new questions. Undeniably, the central bank has significantly strengthened the position of digi-wallets in the economy. However, are they standing at par with commercial banks? The answer is, no. Even with the e-wallets now able to issue their own cards, there are still certain aspects that banks enjoy an advantage in.
- Interest: While banks offer a fixed rate of interest on your deposits, there is no such provision in e-wallets, yet.
- Upper limit: e-wallets have a more tighter upper limit, beyond which you cannot keep your money in there.
Presently, RBI has put e-wallets at a pedestal that can be called “quasi-banks”. There are still a few areas where the traditional banking system has an upper hand.
The move is expected to give a notable boost to mobile transactions in the country. Transactions through e-wallets are already significantly popular, even after RBI introduced KYC mandates. According to official data, wallet transactions recorded an increase of 115.22 million from August 2017, to August 2018. On this note, it is also apparent that with the introduction of the lucrative interoperability, RBI will further improve the KYC status of several digi-wallets.
Interoperability will be a milestone in the day-to-day liberty of transactions for all parties involved- be it customers or businesses. A fully-fucntional digital India ahead- what do you think? Let us know in the comments below!