GlobalData, a data and analytics company, has released a report in which it said that the total mobile wallet transactions in India will reach up to Rs 800 billion in 2017, a growth of 113 per cent from the previous year. It is slated to grow further to surpass Rs 1 trillion mark in 2018, according to the data company.
The report also acknowledged that the government’s eagerness to safeguard consumer interests with the introduction of a slew of regulatory guidelines for mobile wallet providers.
“Complying with the new guidelines for the Indian wallet market, brought in by the Reserve Bank of India (RBI) in October this year, could be a challenging task for small players operating in the industry,” said Ravi Sharma, Senior Analyst at GlobalData.
Recently, the Reserve Bank of India (RBI) directed companies and banks to make KYC (know-your-customer) compliant prepaid payment instruments (PPIs) — mobile wallets, interoperable within the next six months.
According to the new guidelines, all the PPIs will now be interoperable, which means it will allow a transaction with each other. It brought in fraud detection norms to prevent fake wallet transactions steps which will change the scope of operations for mobile wallets.
Customers can now move money between wallets of different companies and banks seamlessly through Unified Payments Interface (UPI) provided they complete full KYC formalities like they do for bank accounts.
The RBI said minimum KYC wallets cannot have a balance of more than Rs 10,000 and this can be allowed only for the purchase of goods and services and not for remittances to other wallets or bank accounts. These wallets will have a limit of Rs 1 lakh and all facilities for fund transfer will be allowed.
Prepaid payment instruments cannot be loaded with more than Rs 50,000 per month and the issuers cannot pay interest on the PPI balances, the Reserve Bank said today.
For increasing the limit of PPIs to up to Rs 1 lakh, the issuers will have to do a KYC check of the instrument holder.
The central bank also raised the bar for the net-worth requirement for companies seeking a prepaid payment instrument (PPI) license. This has been raised from the existing Rs 10 m to Rs 50m, and will increase further to INR150m by March 31, 2020 which will become the new minimum threshold thereafter.
Sharma continued, “Ensuring KYC compliance is bound to increase cost incurred in the acquisition of new customers as well as the verification of existing users. While it may not affect bigger players such as Paytm as they are already working with their customers to update KYC, the additional compliance costs are likely to impact smaller firms.”