Interoperability between mobile wallets could change the digital payments landscape

It has been nearly a year since the government implemented demonetisation and the effects of the decision are still being witnessed and analysed. While the move has been hotly debated, it comes as no surprise that it has triggered a massive growth of mobile wallets and its usage in the country.

However, the point of contention with regard to mobile wallet usage was that each individual wallet could only be used in insolation and users could not transfer money between two different mobile wallet operator.

On October 4th 2017, the Reserve Bank of India (RBI) announced that it would allow e-wallets of private firms to interoperate. So, users of one wallet app will now be able to transact with users of a different wallet app. This facility is currently functional under the state-owned Unified Payment Interface (UPI), available only to banks and those e-wallets built on the UPI platform.

This move comes along with other sweeping reforms that the RBI plans on undertaking in order to facilitate a smoother digital payments eco-system which could influence more businesses and customers to adopt digital transactions. The government envisions a Digital India 2.0 and this is just one of the many steps it is taking to ensure that their mission is fulfilled.

In its directive, the RBI set December 31, 2017 as the compliance deadline for the new set of rules which includes stricter Know Your Customer norms for e-wallets. It also added that the operational guidelines on interoperability will be issued separately.