The Reserve Bank of India (RBI) is reportedly planning to allow digital wallets such as Paytm, Mobikwik and Freecharge access to the government’s Unified Payment Interface (UPI) platform. This move would boost digital and cashless transactions in India by making it more convenient for consumers to use their money virtually among the different apps.
Sources told The Economic Times that the RBI would declare guidelines on interoperability between UPI and other digital wallets – such as the interchange fees – within two to three months. Rules for digital wallet firms on how to sync Know Your Customer (KYC) documents will also be announced soon.
Currently, digital wallets can only access UPI through partner banks. Transfer of money or payment is not possible from one e-wallet to another. If you need to pay a merchant who accepts Paytm, then you also need to have the Paytm app – your PhonePe account will be useless here.
By allowing UPI to sync with digital wallets, customers will be able to transfer money from one wallet to another. This will mean that people will no longer need to have the same apps installed for seamless cashless transactions.
Digital wallet companies and banks also agree that interoperability will fortify the business model of e-wallets and make the cashless system more inclusive. More people are downloading non-bank payment apps such as Freecharge, Paytm, MobiKwik and PhonePe than bank UPI wallets such as ICICI Pockets, Axis Pay and SBI Pay, indicate numbers from Google Play Android Store. However, according to RBI, the UPI network saw around 4.2 million transactions worth Rs.1,900 crore in February alone.
The Ratan Watal Committee had suggested in a report in December 2016 that non-bank payment service providers should be given access to government-supported payment networks. The upcoming interoperability move by RBI is likely to be a result of this report.