E-wallets are similar to bank accounts, but more convenient: Experts

Will help those who can't ensure minimum balance

Four key announcements made in the April 7 monetary policy are likely to enhance the appeal of prepaid payment instruments (PPIs) like mobile wallets. Enrolling is easy. They have no mandatory minimum balance requirement. Since they will offer many of the same functionalities as a bank account, they are likely to find more takers.    

Interoperability made mandatory: Earlier, money transfer from wallet-to-wallet and from wallet-to-bank account was not possible in the case of several PPIs. The Reserve Bank of India (RBI) has now made interoperability mandatory for full know-your-customer (KYC) PPIs.

“This will free up the flow of money from a wallet. A user will now be able to transfer money from his wallet to any other wallet and also to a bank account,” says Yogendra Kashyap, managing director and chief executive officer, RapiPay Fintech.

Membership to RTGS/NEFT allowed: Non-bank players like PPIs have been given membership of the RBI-operated central payment systems — real-time gross settlement (RTGS) and national electronic fund transfer (NEFT).

“Earlier, the customer who had a wallet could only use immediate payment service or unified payments interface (UPI) as a method of fund transfer. Now, he can also use NEFT and RTGS if he has a full KYC PPI accou­nt,” says Ayan Agarwal, vice-president, Transcorp International.

He adds that UPI tends to be used more for small-ticket payments, peer-to-peer payments, and person-to-merchant payments.

“Business transactions tend to be done more through RTGS and NEFT. Earlier, you needed a bank account to initiate payments using these metho­ds. Now, you can initiate them using a full KYC mobile wallet,” says Agarwal.  

Hike in balance limit: The outstanding limit in KYC mobile wallets has been raised from Rs 1 lakh to Rs 2 lakh. This is the maximum balance a wallet can hold. “This will be a positive for small entrepreneurs, shopkeepers, kirana store owners,” says Agarwal.

Cash withdrawal: Earlier, someone who had a wallet from a non-bank entity could not use it to withdraw cash from it. Now, the RBI has allowed cash withdrawal to full KYC PPIs of non-bank issuers.

These players will issue prepaid cards, which the customer will be able to use to withdraw money from an automated teller machine (ATM) or a micro ATM. The RBI has not defined the limit for the amount of cash that can be withdrawn from a wallet. The limit for depositing cash in a PPI wallet is Rs 50,000 per month.

What more needs to be done

PPI issuers say onboarding customers should be made easier. “Banks are allowed to do Aadhaar-fingerprint KYC. Currently we can only do a video-based KYC, which is more time consuming,” says Kashyap.

He adds that PPI issuers should also be allowed the Aadhaar-fingerprint KYC option.

What these changes mean for you  

You could keep up to Rs 2 lakh or less in a mobile wallet and use it for day-to-day purposes. People who find it hard to open a bank account or maintain the required minimum balance can also use a mobile wallet.