How your mobile wallet will work under the new rules
SHILPA MANKAR AHLUWALIA, partner, Shardul Amarchand Mangaldas, decodes the implications of the rules What are the two key changes in the guidelines that will impact existing and new users? Transaction limits and inter-operability are probably the two big changes to your wallet. Until last week, you could create a wallet within minutes by providing your name and mobile number. This wallet could then be used for transactions up to ~20,000 per month, including transfer of wallet funds to your bank account. These “limited KYC” wallets constitute a majority of the wallets that are in use today. The new PPI guidelines now mandate movement to a “full KYC” framework. As an existing user, your “limited KYC” monthly transaction cap has been reduced from ~20,000 to ~10,000. You can continue to use your wallet, but cannot load amounts beyond ~10,000, and can no longer transfer money out of your wallet to your bank account, until you become a “full KYC” user. In addition to your name and mobile number, you will also need to provide an ID number (Aadhaar card or driver’s license) to create a wallet. Can existing users continue to use the wallet as before? To be able to continue to use your wallet as before, you will need to convert to a full KYC PPI. As a full KYC user, you can transact up to ~1 lakh (per month) and once the inter-operability infrastructure is in place, you will also be able to transfer money from your wallet to other wallets and payee bank accounts. What do the rules on interoperability mean for end users? The new guidelines take a giant step towards interoperability. Until now, you could transfer funds on your wallet to your bank account, to wallets issued by the same issuer but not to other wallets. Over the next six months, all wallets (across different issuers) will become wallet-wallet interoperable and eventually wallet-bank account interoperable (via the UPI infrastructure). What is 2FA and will it change the way I use my wallet? A big plus of the wallet has been ease of usage — simple to set up with a one-click payment feature. The new guidelines refer to a 2FA (twofactor authorisation) requirement for “successive payment transactions” and for all “card” payments. The 2FA is a second layer of verification, as is required for all credit card payments today. Applying 2FA across all wallet transactions is not ideal, and would affect the “wallet experience”. It is unclear whether the intent is to apply 2FA for all wallet payments. Can a wallet be used to buy financial products and services? The new guidelines clearly provide that wallets may be used to purchase financial goods and services (securities, mutual funds, insurance). The next step will be for the RBI to permit dividend and other financial income to be credited to the wallet (the current regulations are unclear on this point). Given that all wallets have to be fully KYC compliant within 12 months from issue, there is tremendous potential for the wallet to evolve from principally a payment instrument to a platform for distribution of a wider set of financial goods.