The Reserve Bank of India (RBI) has mandated that all prepaid payment instruments (PPIs) or wallets that are totally KYC-compliant be made interoperable by March 31, 2022. The central bank announced this by means of a notification issued late on Wednesday.
“It shall be mandatory for PPI issuers to give the holders of full-KYC PPIs (KYC-compliant PPIs) interoperability through authorised card networks (for PPIs in the form of cards) and UPI (for PPIs in the form of electronic wallets),” the notification stated.
Interoperability shall be mandatory on the acceptance side as nicely and it will be enabled by March 31, 2022. PPIs for mass transit systems (PPI-MTS) shall stay exempted from interoperability, although present PPI issuers have the solution to offer you interoperability.
As announced in the course of the last monetary policy evaluation on April 7, the notification improved the maximum quantity outstanding in respect of complete-KYC PPIs to Rs 2 lakh from Rs 1 lakh.
The notification also laid down the guidelines for enabling money withdrawal from complete-KYC PPIs issued by non-banks. There will be a maximum limit of Rs 2,000 per transaction with an all round limit of Rs 10,000 per month per PPI. All money withdrawal transactions performed employing a card or wallet shall be authenticated by an extra issue of authentication (AFA) or PIN. Issuers supplying withdrawals shall place in spot suitable buyer redressal mechanisms. They will also be expected to place in spot a appropriate cooling period for money withdrawals upon opening the PPI or loading or re-loading of funds into the PPI to mitigate the danger of fraudulent use.
The money withdrawal limit from points of sale (PoS) terminals employing debit cards and open program prepaid cards issued by banks has also been rationalised to Rs 2,000 per transaction inside an all round month-to-month limit of Rs 10,000 across all places. Earlier, withdrawals by means of this mode had been capped at Rs 1,000 for tier I and II centres, and Rs 2,000 for other centres. The requirement of submitting information on money withdrawals to the RBI described has been dispensed with.
Last month, RBI had stated interoperability, money withdrawals and opening the use of RTGS and NEFT to non-banks was aimed at attaining parity involving the two sets of entities. Then executive director and now deputy governor T Rabi Sankar had stated, “The idea behind allowing cash withdrawals, etc from non-bank PPI issuers is essentially to level the playing field between banks and non-banks, and also achieve the comfort that it reduces the need to hold cash. The fact that a PPI holder has this comfort that I can whenever I want access cash reduces the actual need to hold cash. That, we believe, will give a big fillip to digitisation in the system.”
Industry players have earlier lauded these moves, saying that interoperability could possibly assistance wallets claw back the space they had lost to banks and other players with the rise of Unified Payments Interface (UPI) and the new KYC specifications. There is also a view that non-banks will as a result be in a position to successfully compete for micro-savings from the below-banked segments.
Shilpa Mankar Ahluwalia, companion – fintech, Shardul Amarchand Mangaldas & Co, stated, “RBI has made four key changes that will create a much greater level playing field between bank and non-bank PPI issuers…These quasi bank payment features will enable much wider usage and penetration of PPIs pushing the growth of digital payments.”