What is the issue ?
- The Reserve Bank of India has released the guidelines for interoperability between prepaid payment instruments (PPIs).
- Prepaid payment instruments such as wallets and cards that will now effectively allow users of popular payment wallets such as Paytm, Freecharge, Mobikwik, PhonePe and PayZapp, among others, to transfer money from one wallet to another.
In its guidelines, the RBI said that interoperability will be enabled through both the card networks and the Unified Payment Interface.
- Where PPIs are issued in the form of wallets, interoperability across PPIs shall be enabled through UPI.
- Where PPIs are issued in the form of cards, the cards shall be affiliated to the authorised card networks.
- The interoperability shall be facilitated to all KYC-compliant PPI accounts and entire acceptance infrastructure.
How wallet interoperability will change the payments game :
- Allow transfer from one wallet to another through UPI
- Allow transfer from wallets to a bank also through UPI
- Wallet companies can now issue cards
- Wallets don’t need to partner with banks for UPI and card issuance
- Will boost digital payments, improve financial penetration