Aiming to make digital wallets interoperable by April 2018, RBI has imposed a deadline of February end for mobile wallet companies for compliance of the new Know Your Customer (KYC) norms. The stricter rules relating to detailed customer verification for the digital wallet users is being introduced to ensure safety and security of the digital wallet transactions. Proper identification and full KYC compliance is an immutable requirement for developing trust between the various digital wallet operators for sustainable growth of the interoperable system. The RBI’s move of facilitating interoperability of digital wallets will further reinforce the strong growth in the digital wallet ecosystem and give impetus to the government’s Digital India initiative.
Issued in October 2017, the master guidelines for interoperability of private e-wallet operators will allow the users to transact between two different wallet apps. Currently there 50 bank promoted prepaid wallets and 55 non-banking PPI’s (prepaid payment instruments) operating in India. RBI aims to make all the, PPI’s both banking and non-banking, fulfilling the KYC norms interoperable via Unified Payments Interface (UPI) by April 2018 in the first phase. The monetary authority of the country also plans interoperability between e-wallets and bank accounts, and between different prepaid cards in subsequent phases. The users have 12 months to decide on their digital wallet usability and get their completion of KYC requirements. RBI has also provided multiple modes for the users for getting their identity verified.
The initial deadline given to private wallet operator for KYC norms compliance was 31st December, 2017. However, this was further extended to 28th February, 2018 to give more time to the operator to get the customer verification details. The new RBI guideline is not received by the wallet operators with elation due to the disinclination of customers to take efforts to submit KYC details before the deadline. This is expected to erode 90% of the user base of the INR120 billion mobile-wallet industry, significantly hitting the wallet firm businesses. Firms like BookMyShow, which provided wallet facility MyWallet, have already reported plans to discontinue its wallet service.
However, once the KYC norms are in place the wallet firms will stand to benefit from the increased adoption of digitalized payment methods due to ease of use and transfer processes. The interoperability will influence more businesses and consumers to switch to prepaid payment instruments, which in turn will also give impetus to the government’s Digital India initiative.
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