RBI makes interoperability mandatory for all mobile wallets, but what does it mean?

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With an aim of maximum utilisation of digital payments banks, the Reserve Bank of India (RBI) in its monetary policy meet on April 7 said if the KYC requirements have been met, mobile wallets can facilitate interoperability for customer ease.

This means your mobile wallets can soon turn into banks which would allow the transfer of funds from one platform to another. It is a replica model of how you transfer and receive funds from different bank accounts.

“The Master Direction on Issuance and Operation of PPIs dated October 11, 2017 laid down a road-map for a phased implementation of interoperability amongst Prepaid Payments instruments ( PPIs) issued by banks and non-banks. Thereafter, the guidelines issued in October 2018 enabled interoperability, albeit on a voluntary basis, insofar as the PPIs were full-KYC (they met all Know Your Customer requirements). Despite a passage of two years, migration towards full-KYC PPIs, and therefore interoperability, is not significant,” RBI said.

It, therefore, proposed a mandatory rule to allow interoperability for full KYC PPIs and acceptance infrastructure.

Currently, Unified Payments Interface (UPI) is used to transfer money from mobile wallets. It works in three ways – wallet-to-bank, bank-to-wallet, or bank-to-bank transfer. With the new announcement, you can transfer money from one digital wallet to another. This means users can now transfer money from, say a Paytm wallet to PhonePe wallet directly.

In order to encourage interoperability amongst platforms– the limit of outstanding balance in the PPIs has been increased to Rs 2 lakh. The previous limit was Rs 1 lakh.

“To incentivise the migration of PPIs to full-KYC, it is proposed to increase the limit of outstanding balance in such PPIs from the current level of ₹1 lakh to ₹2 lakh. Necessary instructions will be issued separately,” RBI said.