web analytics

RBI Provides Approval For Money Transfers Between e-Wallets

The Reserve Bank of India (RBI), India's central bank has made a decision that will make e-wallets a whole lot easier for Indians to use.

The RBI finally allowed for e-wallet-to-e-wallet transfers which will make payment a whole lot easier for millions of Indians.

In the past, Paytm users could not send money to Mobikwik users and vice versa. Now that roadblock is removed and the e-wallet market is expected to get a much needed boost.

The RBI did more than just lift the ban on e-wallet transfers.

The Central Bank has also issued a new set of guidelines that will govern money transfers. This includes transfers between different digital wallets but people will also now be able to send money to individual gift cards and even bank accounts. This will be done via the Unified Payments Interface (UPI), the Indian government's instant payment interface.

The new guidelines will be a big help to the 49 mobile wallet companies in the country. They have been struggling to offer a flexible offering to the market and the new guidelines breathe new life into their offerings and what is potentially a billion-dollar industry.

It helps that the RBI did not put any minimum net worth requirement for interoperability – which means even the smallest mobile wallet company can offer this new function. The only restriction is that the digital wallets need to implement know-your-customer requirements to avoid money-laundering and scams.

In a statement, Bipin Preet Singh, MobiKwik's founder said

Now, a user can look at their wallets as a mini bank account which stores some money, has some value, and can be used to make payments anywhere without the customer exposing their main account, therefore, it also offers security.

Additionally with this feature, digital wallet companies will be able to issue cards in partnership with some of the world's biggest payment processors like MasterCard and Visa. It also helps that the new guidelines completely cut out banks from the equation, reducing fees and making transfers quicker.

Losers In The Deal

Not everyone is happy with the new guidelines and the freedom it offers to mobile wallets. The biggest losers are the payments bank sector. These are banks that perform core banking functions such as money transfers but are not allowed to lend money – which is the primary way a bank earns its revenue.

With the improved e-wallet offering, payments banks will most likely take a stiff hit. They are already struggling with low overheads and a small customer base and once e-wallets gain more prominence, their operations could soon be dealt a fatal blow.

Related Articles

UK Banks Could Test New Global Measures To Prevent Cyber Attacks

Sam Woods, the Deputy Governor for the Bank of England (BoE) said in an interview this week that banks in

Indian PM Announces High-Value Notes Demonetisation

In a sudden move that has taken everyone by surprise, Indian Prime Minister Narendra Modi has announced that currency denominations

IMF Urges Countries to Curb Corruption

The International Monetary Fund (IMF) has asked countries to focus on tackling corruption countries as it would improve their economic