Mobile Wallet – InterOperability – Who gets the Boost?

Wallet InterOperability Soon to Start – Whats in here…

Reported by ET,  RBI on Wednesday said, “interoperability amongst KYC compliant Prepaid Payment Instruments (PPIs) will be implemented within six months of the date of issuance of the revised Master Directions.” The Master Directions will be issued by the bank on October 11, 2017

What it means in a Layman’s term: This would allow, for instance, a Freecharge wallet user to pay to another person using a Paytm wallet, and vice versa. It will also work for merchant payments.

There are around 16 authorised wallet companies in India including Paytm, Mobikwik, Oxigen Services, Airtel Money, M-Pesa by Vodafone and Citrus Payment Solutions. Currently, interoperability among these players is not allowed in the country.

The interoperability between different PPIs will likely boost further usage of digital transactions among users of various wallet players such as Paytm, Freecharge, and MobiKwik as well as boost the payments space in India, which  is projected to reach $500 Bn by 2020, contributing 15% of India’s GDP, as per a recent report by Google and Boston Consulting Group.

  • Acquiring business Big Boost: Not only P2P grows even M2P & P2M across wallets – Acquiring business Big Boost No more Wallet On-us | Wallets may now enter Issuer – Acquirer gameImage result for "Benefits" of wallet interoperability
  • Loyalty Business – Big boost
    • Now, you can stick around to your favourite wallet but switch on a big billion sale 🙂 ….as neededThe Indian retail industry is estimated to be $450 Bn out of which only $30 Bn comprises the organized sector. Earlier, a lot of average Indian customers prefer to walk into a store which offers large discounts on its products, rather than accumulate points and redeem them later.Now,  walk into a store > pick large discounts > Pay by preferred wallet > accumulate points and redeem
  • Wider Ecosystem – Big boost
    • These include: wider adoption; higher transaction volumes; and greater velocity of money in the ecosystem. From consumers’ perspective, interoperability means more convenient and efficient services.  In India through accounts linked to the digital national identity – the Aadhaar and the Unified Payments Interface (UPI) is providing access to financial services for millions through low cost agency operations operated by special purpose payment banks or small finance banks, besides traditional commercial banks.Interoperability combined with digitised information will enable Indians to shop for Small value loans, Cross Selling opportunities between multiple institutions.
  • Government Fees –Big boost
    • Interoperability means different companies, which are otherwise competing with each other for a larger share of the business, will end up sharing resources. That means there will be a charge put on such interoperable transactions as a cost of using the other company’s network.Currently , similar charges are paid for using one bank’s ATM card at another bank’s ATM beyond a certain number of free transactions in a month. For similar transactions between wallets, the RBI will need to develop rules  ..
  • Wallet Product Change – Big boost
    • I cant forget my inner product manager 🙂  …. Wallet providers have to bring in the inter-wallet features like Fees & Charges (with GST Controls), Send & Receive value – API’s (More possibly UPI Interface), electronic deposits streamline reconciliation process,  reducing declined transactions and other problems, Stickiness benefits (Loyalty or Cash Back)So not only Wallets need the change, NPCI, UPI Participant Banks, Merchants, Retail Outlets …all…
  • Digitization with Control  – Big boost
    • KYC controlled environment, government further track small value transactions as of yesterday it was Wallet > Cash > Other Wallet so no control. Now, it would be Wallet > RBI > Wallet, pure digital and complete control as it is limited to Full KYC Customers across. And that this will operate as a one-time tax on the current float of unaccounted-for wealth stored in cash while whip-lashing the consumer economy into digital (or plasticized) transactions.
  • Why the rush for interoperability?
    • especially when some regulators opine that digital financial services is in its infancy and there is a danger in being too prescriptive, whilst the industry is still learning. From a policy maker’s perspective, interoperability facilitates an efficient payment system, as it enables real time micro payments to be made and cleared between any account or any wallet.
  • Wallet InterOperability – An Enabler
  • Who are the clear winners so far –

top mobile payment apps