E-WALLETS LIKELY TO REGAIN CURRENCY

MUMBAI: Digital wallets may regain some ground, with India’s payments body and the Reserve Bank of India (RBI) allowing more flexibility to the digital payment mechanism that lost some relevance after the introduction of unified payments interface (UPI) transactions.

According to experts, allowing UPI to load money to e-wallets will help make the payment instrument more popular.

“With interoperability coming in, it will become easier to move funds from one wallet to another and make payments. Currently, UPI is only limited to bank accounts, but going forward, wallets will use the UPI channel to ensure interoperability,” said Mihir Gandhi, partner and leader (payments transformation) at PwC.

Earlier this month, the RBI mandated issuers of prepaid payment instruments to allow interoperability by March 31 2022. It permitted interoperability through the UPI channel, the homegrown payments network.

This, however, will be limited to customers who are fully KYC compliant. KYC, or know-yourcustomer, norms allow a financial service provider to verify the identity of the customer. The process of allowing interoperability began in 2017 when RBI laid down a road map, followed by issuing of guidelines in 2018 enabling interoperability, albeit on a voluntary basis.

“To incentivize the migration of prepaid payment instruments (PPIs) to full-KYC, it is proposed to increase the limit of the outstanding balance in such PPIs to ₹2 lakh,” RBI said on April 7.

Gandhi said there will be an uptick if it is easy to load money through UPI.

“It is expected that wallets will be used for person-to-merchant transactions where there is convenience and some rewards to the customer. The new rules will lead to more wallet transactions at merchant outlets where the customer can use UPI to pay for goods or services, either offline or online,” he said.