New Delhi/Mumbai: The Reserve Bank of India (RBI) on Wednesday directed companies and banks to make know-your-customer-compliant prepaid payment instruments (PPIs), such as mobile wallets, interoperable within the next six months.

“In the first phase, PPI issuers (both bank and non-bank entities) shall make all KYC-compliant PPIs issued in the form of wallets interoperable amongst themselves through Unified Payments Interface (UPI) within six months from the date of issue of this direction," RBI said. UPI is a payments system launched by National Payments Corp. of India (NPCI) in August 2016 that facilitates instant fund transfer between two bank accounts on a mobile platform, without having any details of the beneficiary’s bank. KYC is a process through which financial institutions verify information about customers to ensure services are not misused. “In subsequent phases, interoperability shall be enabled between wallets and bank accounts through UPI. Similarly, interoperability for PPIs issued in the form of cards shall also be enabled in due course," said the directive issued by RBI.

According to RBI, the directive is effective from the date of issue and the existing PPI issuers shall ensure compliance with the revised requirements on or before 31 December. However, the operational guidelines on interoperability will be issued separately.

“Introduction of interoperability is a revolutionary move as it has given the PPIs a chance to compete with the physical retail market. Most of the merchants who had to put quick response (QR) codes of different wallets to accept payments from customers, will now just put the QR code of one wallet. He can easily transfer the money from his one wallet to another," said Sunil Kulkarni, joint managing director at Oxigen Services (India) Pvt. Ltd, an e-wallet and payment solutions company.

This move will also ensure fair competition between the different PPI providers as it will eliminate the scope of spending exorbitantly to get merchants on board, added Kulkarni. The directive also revised the limit of semi-closed PPIs from Rs20,000 to Rs10,000 per month. Semi-closed PPIs are used for purchase of goods and services, including financial services, remittance facilities, etc., at a group of clearly identified merchant locations or establishments which have a specific contract with the issuer (or contract through a payment aggregator/payment gateway) to accept the PPIs as payment instruments. These instruments do not permit cash withdrawal.

The limit had been doubled to Rs20,000 in November as a measure to promote cashless transactions amongst the small merchants, who are a major chunk of PPI holders with minimum KYC.

These merchants have to provide minimum details including mobile number verified with one-time password (OTP) and self-declaration of name and unique identification number of any of the “officially valid documents".

“The amount loaded in such PPIs during any month shall not exceed Rs10,000 and the total amount loaded during the financial year shall not exceed Rs100,000," RBI said.

Bhavik Vasa, chief growth officer, Ebix Cash, said that while the notification creates a level playing field between various PPIs, his firm will be seeking clarifications from RBI regarding downward revisions in the amount that can be loaded for gift cards.

“Earlier gift cards could be loaded with Rs50,000 worth of cash but this has been reduced to Rs10,000. In contrast, a person can buy Rs2 lakh worth of gold in cash. We will be seeking clarity from RBI for uniformity."

Full KYC PPIs with balance up to Rs100,000 continue to be made available by authorized PPI issuers, according to the new directive.

“Major use cases have opened up for full KYC PPI holders especially for those having pre-registered beneficiaries. In such cases, fund transfer up to Rs1,00,000 per month per beneficiary is permissible which was Rs25,000 earlier. The move will directly compete with banks when it comes to domestic remittance," said Kulkarni.

RBI had issued guidelines for issuance and operations of PPIs in April 2009 to foster an orderly development of the prepaid ecosystem.

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