As India’s war on cash wages on, mobile wallets continue to reap the rewards. Although some experts suggested the advent of the Reserve Bank of India’s Unified Payment Interface platform could make mobile wallets obsolete, a new plan for interoperability could be a boon for Paytm, MobiKwik, Freecharge and other mobile wallet providers.
M-wallets can access the UPI network through partner banks for bank-to-bank money transfers. By opening up the UPI, wallet users are able to send and receive money directly without routing the transaction through the bank. However, wallet providers will still require their partnerships with banks for such services as settlement, reconciliation and addressing grievances, according to Inc. 42.
The central bank is expected to develop interoperability guidelines, KYC standards and interchange fees for wallet providers to be able to use the UPI framework, according to The Economic Times. “The opening up of the UPI framework and, in turn, the permission to allow interoperability between wallets is something the RBI is looking into very seriously and should be able to activate in two to three months,” a source familiar with the developments told The Times.
Digital payments providers have enjoyed substantial boosts in transaction volume—as much as 1,000 percent—since the Indian prime minister removed from circulation 500 (US$7.64) and 1,000 (US$15.29) rupee notes on Nov. 8, in an effort to combat counterfeiting and terrorist financing.
With the dramatic increase in m-wallet transaction volume the Indian government also is developing an insurance framework for m-wallet and electronic transactions. Government officials from the IT Ministry have begun discussions with m-wallet providers and insurance companies on how to insure money in the wallet apps, and rules will be announced once the framework is nearer completion.
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