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The monthly limit for loading digital wallets has been raised to Rs 20,000 from Rs 10,000 following the demonetization of Rs 500 and Rs 1000 notes, the Reserve Bank of India (RBI) said in a circular. However, these enhanced limits will be applicable only till  December 30, 2016, subject to review.

The RBI also laid out some guidelines for merchants of wallets:

– Merchants will have to give a self-declaration of their status as a merchant. In addition, they will give details of their bank account which will be kept by the wallet issuer.
Merchant fund transfers to bank account from their wallet will not exceed Rs 50,000
– Inflows of funds / credit to such merchant wallets shall emanate only from sale transactions of the merchant.
– Wallet issuers will clearly identify such PPIs in their systems for the purpose of maintenance of escrow, reporting and MIS requirements.

This will be applicable for wallets without full KYC and those with KYC will continue to have an upper limit of  Rs 1 lakh.

Note that the RBI is still yet to complete its review of guidelines for wallets and is supposed to come out with new rules by December 31, 2016.  At the moment, there are 47 non-bank entities and 45 banks operating in the payments space. Most recently, JustDial got a wallet licence from the RBI. 

MediaNama’s take

The RBI’s guidelines for merchants will perhaps put some brakes on wallet companies and their merchant expansion plans which have exploded following the demonetization. It is understandable that the RBI wants wallet companies to keep a track of funds transferred to bank accounts by a merchant but the limit of on Rs 50,000 wallet-to-bank account transfer does not make sense. With the bank account details of such merchants, the RBI can keep track of suspicious amounts of money being funnelled either way.

Keeping track of inflow of funds into a merchant wallet might be more difficult and making sure that they were only due to sale of goods or services may be difficult. An offline merchant may simply give his phone number for a wallet transfer for selling vegetables. Would that be considered as a person-to-person payment or would that be considered as person-to-merchant payment?