Adding a new chapter to the digital payments ecosystem in the country , the Reserve Bank of India (RBI) is planning to allow interoperability between mobile wallets and eventually give them access to Unified Payments Interface (UPI), but it's not going to be easy, given that with relaxed capital requirements, not all PPI (Prepaid Payments Instrument) licence holders have the same level of technology and security readiness.
"Since interoperability between wallets has to be brought about, RBI is thinking of re-looking into the capital requirements for a PPI licence, and also reviewing the threshold limit of transactions to become a wallet player," said two people aware of the matter.
At present, there are 53 PPI licence holders in the country, according to the central bank, but industry insiders said not more than half of them are actually active in the payments business acquiring merchants and showing strong transactions.
"Once there is interoperability between such players, I am sure there's a need to check on the level of activity of the players, otherwise it could turn out to be an administrative headache to manage so many entities," said a top executive of a payments company. "In the current scenario, top five to six wallets are showing 90 percent of the transactions."
Wallets had been given licence according to very relaxed net worth criteria, which allowed a huge flux of players to get into the market. According to regulatory norms, for a PPI, the minimum paid-up capital needed is Rs 5 crore with a minimum positive net worth of Rs 1 crore.
"If serious players are not in the game, managing so many dormant entities could pose serious regulatory challenges -this is something we are closely looking at," said one of the persons quoted above.
In case of other interoperable systems such as Bharat Bill Payment (BBPS) and even Trade Receivables Discounting System (TReDS), the regulator had mandated a minimum capital requirement of Rs 100 crore.
While the recent step of the ministry of electronics and IT to issue draft cyber security guidelines for mobile wallets is a step towards that direction, payments executives ET spoke to said that wallets will always be subjected to strong security scrutiny.
"I believe there's a need for balance between security and ease of business because wallets are catering to very small value transactions and strict norms of full KYC and others could make it difficult for the lowest sections of the economy to adopt the solutions," said the executive of the payments firm quoted above. - TOI