Wal­let Cos to Take a Hit as Banks En­ter Fund Trans­fer Biz

Ex­perts feel move could take a toll on wal­let cos’ growth prospects and their fund-rais­ing plans

The Economic Times - - Companies -

Pratik Bhakta and Saloni Shukla

Mum­bai: Banks, which were left be­hind in the pay­ments space by wal­lets of fi­nan­cial tech­nol­ogy com­pa­nies, are strik­ing back with an ex­clu­sive tie-up for fund trans­fers with Uni­fied Pay­ments In­ter­face (UPI) of the Na­tional Pay­ments Corp (NPCI) deal­ing a ma­jor blow to the growth prospects of wal­let com­pa­nies.

The ex­clu­sion of wal­let providers by RBI has up­set some who have been look­ing to grow and are in the midst of rais­ing funds which could af­fect their val­u­a­tions, said two peo­ple who did not want to be iden­ti­fied. NPCI, which ad­min­is­ters UPI, might have ex­cluded wal­let com­pa­nies due to the sus­pect na­ture of their se­cu­rity pro­tec­tion rather than with any other mo­tive. UPI, per­mits cus­tomers to choose any bank’s app for pay­ments. If this trial run suc­ceeds, it could be ex­tended to all forms of bank deal­ings.

“I think se­cu­rity is a ma­jor is­sue they are con­sid­er­ing while al­low­ing wal­lets to in­te­grate with the UPI plat­form,” said Jiten Gupta, man­ag­ing di­rec­tor of Cit­rus Pay, a wal­let provider. “The three or four well-known wal­lets may be hav­ing high lev­els of se­cu­rity au­dits, but I do not think they are ready to trust all the 30 PPI li­cence hold­ers.”

With UPI re­quir­ing au­then­ti­ca­tion of the trans­ac­tion within the app it­self through a mo­bile pin, the reg­u­la­tor is hes­i­tant to get wal­let play­ers on board who nei­ther have a long track record, nor sound fi­nan­cials to face fu­ture li­a­bil­i­ties if there are glitches.

If wal­lets are left be­hind, their busi­ness would be di­rectly af­fected be­cause UPI brings with it con­ve­nience of trans­ac­tions which till date was the big­gest pos­i­tive for wal­lets, said Cit­rus’ Gupta.

But the doors are not shut for­ever.

“Right now, wal­lets are not al­lowed in UPI, but they have been plead­ing with RBI di­rectly,” says AP Hota, man­ag­ing di­rec­tor of NPCI. “RBI has only given ap­proval for the pi­lot project, when they give the fi­nal ap­proval wal­lets may be al­lowed, but it may take some time.” The suc­cess of even the UPI may also de­pend on the num­ber of peo­ple in­volved in it.

“At the end of the day, UPI as a net­work would only suc­ceed if more and more pay­ments play­ers join it,” said Anish Wil­liams, CEO of Transerv, which runs the Udio wal­let app.

While 10 banks have al­ready adopted UPI, NPCI hopes to get all 29 ma­jor banks on board within the next few months. With banks till date be­ing dis­mal in mer­chant ac­qui­si­tion and ter­mi­nal­i­sa­tion, ques­tions arise re­gard­ing their abil­ity to utilise the new in­ter­face to the max­i­mum. “The plat­form is ready but for pay­ments through UPI be­ing ac­cepted at mer­chant points and de­liv­ery boys, ques­tions arise on the kind of in­fra­struc­ture roll-out that banks would have to do. Since we have been able to do much bet­ter than banks in these fronts, I am sure it is just time be­fore RBI would let us be­come a part of UPI,” said Up­asana Taku, co-founder of Mo­bik­wik.

While 10 banks have al­ready adopted UPI, NPCI hopes to get all 29 ma­jor banks on board within the next few months

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