Last October, the Reserve Bank of India announced that it would allow interoperability among prepaid payment instruments (PPI) in phases, including e-wallets of private players. At the time, the expectation was that interoperability among KYC-compliant PPIs would be implemented by mid-April.
The industry has been waiting with bated breath ever since. According to The Economic Times, the wait is nearly over since the much-anticipated interoperability guidelines might be announced soon. "The National Payments Corporation of India (NPCI) has already cleared the safety security aspects of taking wallets onto the interoperable platform. The RBI is ironing out a few final issues before releasing operational guidelines. This is expected to happen within a month from now," a banker told the daily. Another source pointed out that with mobile wallets having already brought in the mandatory Know Your Customer (KYC) requirements for their customers, the central bank could just be waiting to get all the players develop similar technical capabilities.
According to Ajay Adiseshann, Founder & CEO, PayMate India, interoperability would allow users of one wallet app to transact with users of a different wallet app. This facility is currently functional under the state-owned Unified Payment Interface (UPI), available only to banks and those e-wallets built on the UPI platform. So, it has long been speculated that interoperability would inevitably lead to a far greater adoption of mobile wallet technology and cause the overall market to mushroom. Payments Council of India chairman Navin Surya, in fact, pointed out last October that the reform could pave the way for PPIs contribution to digital payments jumping up 30-40 per cent in next 5 years, up from the current share of less than 10 per cent.
That is why wallet companies, currently reeling under the revised and more stringent KYC norms of the apex bank, are keenly awaiting this reform. "We were told that with full KYC we would eventually be given wallet interoperability which will make our systems almost at par with bank payment applications and Unified Payment Interface. Till that happens, our business is facing stress," a senior executive of a payments company with a PPI licence from the RBI, told the daily.
In fact, several pure-play wallet companies like MobiKwik and FreeCharge have already joined the UPI platform by becoming third-party service providers for banks. "I believe India will see a hybrid model for the next three to five years between prepaid instrument players and UPI players and slowly businesses will move from their guarded ecosystems to an interoperable one and that could see digital payment adoption expanding like what we saw in the case of ATMs," Vivek Belgavi, partner for fintech at PwC, told the daily.
But even if the guidelines are out soon, experts say that companies may need another 3-6 months to stabilise on the new platforms. It will, after all, be quite a change for the stakeholders to go from competing aggressively with each other to collaboration with trust as the cornerstone.
With PTI inputs