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End of an era: The RBI issues interoperability guidelines for wallets

The Reserve Bank of India has finally issued guidelines for interoperability of wallets, one year, eight months and seven days after the deadline of February 9th 2017 set by the Watal Committee for this task lapsed. The guidelines aren't wallet friendly either: when they first launched, wallets were meant to be an alternative to banks, essentially, stores of small amounts of money required for small transactions. With these guidelines, wallets are now required to use UPI (Unified Payments Interface) for interoperability, and required to work with a sponsor bank for settlement. It's essentially the end of an era in digital payments: the market pressure created by interoperability will force wallets to participate, and the dependency on banks is built into the guidelines. Wallets will no longer be independent of banks. Remember that independent payments services were also largely rendered defunct when the RBI came out with a bank-friendly policy for mobile banking. The guidelines for interoperability The central bank is looking at enabling three key phases and has set out guidelines for these: interoperability between wallets through UPI, between wallets and bank accounts through UPI and for PPI cards via card networks. 1. Compliance for PPI cards and wallets: Which users can transfer money? Interoperability will only be facilitated for KYC compliant accounts. Since Aadhaar authentication is no longer valid for private parties, PPIs will have to undertake other forms of KYC. How will the transfer be enabled? This will be enabled through UPI if the PPI is a digital…

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Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

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