The Reserve Bank of India (RBI) is reportedly sticking to its original target of making prepaid payment instruments like mobile wallets interoperable by April despite extending the KYC verification timeline for payment companies by two months. This development has been reported by the Economic Times quoting bankers who are “aware of the matter”.
“Though there are a few details that need to be worked out, the initial timeline promised by RBI should remain the same,” an unnamed banker told ET. “We could see the regulator clearing wallet interoperability in the coming weeks.”
As per RBI’s master direction released in October, digital wallets were to become interoperable in six months.
Interoperability would allow users to transfer money between PPIs from different service providers. This means one could in theory transfer money from a Paytm wallet to an Ola Money wallet and subsequently to a bank account as well.
Interoperability between PPIs will not just be limited to mobile wallets, prepaid cards are also expected to be made interoperable as part of this process.
“There will be no distinction made on the basis of the form factor of payments. A prepaid card is just a form of making a payment and… (interoperability) includes both mobile wallets as well as cards,” one of the sources told ET. “The priority for RBI is to ensure that consumers are not affected.”
Both the sources told ET that full KYC and proper identification of users is non-negotiable for the wallet interoperability proposition.
Mandatory KYC for PPI
As per orders issued by the Reserve Bank of India, February 28, 2018 was the last day for mandatory Know Your Customer (KYC) compliance by prepaid wallet customers. Going forward all non-KYC complaint wallet accounts will have very limited usability.
The Reserve Bank of India has said that customers will not lose money from mobile wallets even if companies remain non-compliant to its full KYC (Know Your Customer) guidelines, after the deadline expires. But usability of the wallet will be severely limited.
Reloading on the wallet and remittances can only resume after completing the KYC requirement. Users will be able to undertake transactions for purchases with the available balance in the wallet. So you can still pay for your Uber rides and order food online with the balance amount left on your wallets even after the KYC deadline expires, but you can’t add any more money to it.
KYC is having an impact on wallet companies
Mobile wallet companies have raised alarm that this move could seriously cripple them. According to a report on the Economic Times, the total number of customers who have submitted their KYC details is in ‘low single-digit’ percentage.
The report quotes the chief executive of a payments company speaking anonymously, “If these norms are implemented in full force, the entire industry, which handled around Rs 12,000 crore worth of transactions in December, will be facing a major crisis.”
The Payments Council of India (PCI), the representative body for digital payment players, as well as various other industry stakeholders, have spoken about how the full KYC requirements would possibly hamper mobile wallets.