Hurdles in digital transactions temporary: NPCI

While interoperability already exists through UPI, KYC guidelines may need to be strengthened

As more Indians opt for digital transactions, interoperability among instruments still continues to be an issue. The latest case in point is ICICI Bank blocking transactions through PhonePe, an app based on Unified Payments Interface (UPI). 

According to ICICI Bank’s complaint, PhonePe was forcing customers to create new UPI handles on its platform and was violating the interoperability guideline. PhonePe, in its defence, maintained that all users who are registered with it can save their preferred UPI virtual payment address with it. A few months ago, State Bank of India (SBI) had blocked transfer of funds from SBI accounts to mobile wallets through net banking. 

These are temporary glitches and the issue would be sorted out soon, said A P Hota, managing director and chief executive officer (CEO), NPCI (National Payments Corporation of India). “Interoperability already exists because you can use your credit or debit card at any ATM or point-of-sales (PoS) terminal. You can also send money from any bank account to any other through NEFT/RTGS/IMPS. The recent instances are temporary glitches and part of the growing process. They are being addressed. Interoperability has been the main plank of Reserve Bank of India (RBI)’s development work,” he said. 

Recently, while speaking before the Public Accounts Committee, RBI officials said they were finding a way to make cashless transactions cheaper and seamless by introducing a single electronic platform that would support online banking, mobile phone and credit/debit card transactions. According to Naveen Surya, managing director, ItzCash Card, a digital payments company, the current situation (with regard to mobile wallets and prepaid instruments) is similar to when credit and debit cards had started and the card of one bank could not be used on the PoS or ATM of another bank. But today it is possible. “For any payment system to be completely seamless, there has to be complete interoperability. Until then customers will be forced constantly to keep track of which instrument to use for which kind of payment, how much of money to keep in a certain instrument, the limits for each one, etc,’’ he added.

At present, it is not possible to transfer funds from one mobile wallet to another. 

According to Deepak Chandnani, CEO of Worldline South Asia and Middle East, wallets operate with minimum KYC. For loading up to Rs 20,000 there is no KYC, while banks work on full KYC. Hence, if wallets were to become interoperable, it is likely that RBI may insist on certain KYC or anti-money laundering guidelines being met.