RBI is demolishing the walls that divide India’s e-wallet companies

Making payments easier.
Making payments easier.
Image: EPA/Sanjeev Gupta
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There has been a boom in India’s e-wallets industry lately, but most such apps—and thereby, their users—have been siloed. Due to a lack of interoperability, users of one wallet app can transact only with those who use the same app. So they are left in a fix as they need to maintain separate wallets for separate services.

On Oct. 4, the Reserve Bank of India (RBI) said it will allow e-wallets of private firms to interoperate. So, users of one app will now be able to transact with users of a different app. This facility is currently functional under the state-owned Unified Payment Interface (UPI), available only to banks and those e-wallets built on the UPI platform.

E-wallets interoperability will be allowed within six months to those compliant with know your customer (KYC) norms, RBI announced under its developmental and regulatory policies.

Some platforms have been more open all along. For instance, Flipkart-owned PhonePe partners with YES Bank to access the UPI platform, BookMyShow’s wallet accepts payments from multiple wallets, and Google Tez uses the UPI platform to function as an extension of one’s bank account. But once RBI allows interoperability, several others like Paytm, MobiKwik, FreeCharge, Ola Money, and Amazon Pay, too, will be able to do it.

RBI’s decision comes amidst a massive market opportunity—India’s digital payments scene is slated to surpass Rs30,000 crore ($4.6 billion) by the end of 2022. However, hardly any player has achieved profitability yet. To add to the pressure, competition is getting fierce in an already overcrowded market: A slew of public and private players, from the government to myriad fin-tech companies to messaging apps are vying for customers’ wallets.

The central bank’s move may well be the catalyst for India’s digital payment companies who have long sought interoperability.

Paytm welcomed RBI’s move towards openness saying it “should act as a strong boost for digital payments ecosystem in India.” ”For the user, this means they do not have to download another wallet if they already have MobiKwik (or any other),” Bipin Preet Singh, founder and CEO of MobiKwik, told Quartz. “They can pay across the merchant network of any other pre-paid payment instrument. This helps us widen our reach and brings enormous value to our business.” Ola and Amazon did not respond to Quartz at the time of publishing.

E-wallet firms have always claimed that banks have an unfair advantage in the digital payments ecosystem as bank-to-bank fund transfers are as easy as sending a text message, thanks to UPI. For transferring funds via UPI, customers don’t even need to remember the Indian Financial System Code (needed for online bank transactions) or bank account details.

The Ratan Watal Committee, tasked by the government with suggesting measures to encourage e-payments, had recommended in December that e-wallet players be open to interoperability to improve user convenience and their own market share.