Mobile Wallets All Set to Embrace Interoperability As RBI Issues Direction

With the directive, the PPI industry is all set for 5x growth in next 2-3years.

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Looks like the digital wallet and payments companies in India have finally managed to receive the much-awaited validation, as the Reserve Bank of India (RBI) paves the way from interoperability with set norms kick in soon.


Last winter, while issuing the directions for the payments industry, RBI said the purpose was not just to regulate the industry and promote innovation but also to promote interoperability.

Under interoperability, users would in a position to transfer money from one wallet company to another and even bank.

Almost a year later, earlier this week, the RBI issued interoperability guidelines for Prepaid Payment Instruments (PPIs) said “all KYC-compliant PPIs was to be enabled in three phases - (i) interoperability of PPIs issued in the form of wallets through Unified Payments Interface (UPI), (ii) interoperability between wallets and bank accounts through UPI, and (iii) interoperability for PPIs issued in the form of cards through card networks.”

The Industry Outlook

Digital wallets have been the part of the financial services ecosystem for quite some time. However, it was only posted demonetization the industry gained its required pushed and the digital payments grew multi-folds due to the cash crunch.

In fact, according to Statista, the domestic mobile wallet market, which was about INR 1.5 billion in 2016, is not expected to reach about INR 1.5 trillion.

Now interoperability with UPI and card networks,  direct connectivity with IMPS and Non-bank participation in Payment Systems, Naveen Surya, the Chairman Emeritus, Payments Council of India and Chairman, Fintech Convergence Council, believes with the directive the PPI industry is all set for 5x growth in next 2-3years.

“This is a very progressive move for non-bank players and huge foundations to reach under-banked and unbaked with equally powerful Payment product in a league of Debit/Credit Cards. Also now UPI would be accessible to large masses even those who are not banked or are under-banked,” he shared.

Upper Hand

With the new guidelines kicking,  consumers can now pay via any other wallet over UPI and allow wallets to issue UPI handles along with the permission to issue cards without the bank, industry experts opine that the move is all set to give a leverage to the industry among other traditional peers

Commenting on RBI move, Bipin Preet Singh, founder, Mobikwik said “These guidelines give a lot more confidence and credibility to wallets as far as the consumer is concerned. This (direction) gives a lot of legitimacy to the wallet as a payment system. In fact, these guidelines actually imply that the  wallet is becoming like a mini bank account.”

While on other the side, Vinay Kalantri, Founder and Managing Director, tmw views matches with that of Singh, he also sees this an opportunity for the wallet industry to cross-sell new products and improve the customer experience

“Both the service providers and customers will benefit from this move. For wallet providers, it means more business provided they play their cards safe. They can also move into new businesses by issuing new products like co-branded debit cards in association with any network,” he added.