Mobile Wallets to Soon Function As Bank Accounts

Mobile wallets will soon be allowed to withdraw cash at ATMs and point-of-sale terminals.

According to a recent declaration by the Reserve Bank of India (RBI), in addition to making payments, customers will also be able to use mobile wallets at ATMs to withdraw cash and at point-of-sale terminals, similar to bank accounts.

RBI’s decision has made it mandatory for all prepaid instruments (PPIs) including prepaid cards to be interoperable. Currently, only wallets issued by banks offered a cash withdrawal facility. The limit of the outstanding balance in PPIs has also been doubled to Rs 2 lakh,” the apex bank said in a statement.

Abhishek Sinha, Co-Founder, Eko India Financial Services and Co-Chair, believes that RBI’s decision to increase PPI wallet limit to Rs 2 lakh and allow cash withdrawals from full KYC wallet is a strong signal of confidence on the potential of the wallet and it creates a level playing field for PPI operators.

For payments and transfers, the central bank has allowed PPIs to become members of RBI-operated centralized payment systems—RTGS (real-time gross settlement) and NEFT (national electronic funds transfer).

The Payments Council of India (PCI), the leading industry body for digital payments ecosystem in India welcomed RBI’s Statement on Developmental and Regulatory Policies.

“The Statement sets out various developmental and regulatory policy measures on liquidity management and support to targeted sectors, regulation and supervision, debt management, payment and settlement systems, financial Inclusion and external commercial borrowings,” said PCI.

The industry body which has major non-bank PPI issuers as its members suggested that proposing to increase the limit of outstanding balance in PPIs from the current level of Rs. 1 lakh to Rs 2 lakh will support the migration of PPIs into full KYC PPIs and therefore interoperability. The industry body added that this will further increase the penetration of digital payments in the country specially the Tier-3 to Tier-6 centres.

RBI has also permitted cash withdrawal facility from the full KYC PPIs issued by non-bank entities. This was currently limited to only PPIs issued by banks, but with the mandated interoperability and cash withdrawal service permitted for non bank issued PPIs, it will be a major confidence booster to such digital transactions instruments. PCI has welcomed these forthcoming statements by the RBI and has indicated a bright way forward for digital payments instruments in the country.

Mahendra Nerurkar, Director and CEO, Amazon Pay India said, “Permitting non-bank issued PPIs to offer cash withdrawal, and increasing the limit of full KYC PPI wallets, will greatly make digital payments more convenient and spur adoption of PPIs.”

Calling it ‘a big step taken towards digitalization and financial inclusion by the RBI,’ Amit Nigam, Executive Director & COO of BANKIT said, “Most people in India today are equipped with mobiles and use mobile wallets and with these new regulations related to prepaid instruments a lot of people especially in remote rural areas can now easily avail banking services through their phones and existing wallets.”

He added, “If the necessary safety measures are taken properly this can be a huge step, especially in the current scenario, where more and more part of the population is getting more accounts.”

RBI’s Statement on the support to the digital payments acceptance devices and its focus on their interoperability on the whole provide a moral boost to the country’s digital payments industry, believe experts. Digital Payments are a step forward to create a financially inclusive society in the country and PCI has been instrumental to lead such varied discussions with the government with a vision to promote a cashless payments ecosystem in the country.