The Reserve Bank of India (RBI) wants all licensed prepaid payment instruments (PPIs) or mobile wallets such as Paytm, PhonePe and Mobikwik to be interoperable from fiscal 2023, according to a circular issued.

This means that starting April 2022, a fully vetted mobile wallet user one who has fulfilled all know-your-customer (KYC) norms will be able to send and receive money from different mobile wallets. For card-based PPIs, this will be achieved via card network interoperability and for e-wallets through the Unified Payments Interface (UPI), the central bank said.

PPIs for Mass Transit Systems (PPI-MTS) shall remain exempted from interoperability while Gift PPI issuers have the option to offer interoperability, the central bank said in its circular.

Additionally, mobile wallets can now be used for cash withdrawals up to Rs 2,000. The wallet limit has also been increased to Rs 2 lakh from Rs 1 lakh, according to the circular.

“Any PPI issuer offering this facility shall put in place proper customer redressal mechanisms. Complaints in this regard shall fall under the ambit of the respective ombudsman schemes and instructions on limiting liability of customers,” RBI said in its circular. “PPI issuers shall put in place suitable cooling periods for cash withdrawal upon opening the PPIs or loading/re-loading of funds into PPIs to mitigate the risk of fraudulent use of PPIs.”

These measures were announced by RBI Governor Shaktikanta Das after the April 5-7 Monetary Policy Committee (MPC) meeting. “To incentivise the migration of PPIs to full-KYC, it is proposed to increase the current limit on outstanding balance in such PPIs from Rs 1 lakh to Rs 2 lakh,” Das had said in his post-policy statement.

It was in October 2018 that RBI had first issued guidelines for adoption of interoperability on a voluntary basis for full-KYC PPIs, but the migration toward interoperability has not been significant.

At present, cash withdrawal is allowed only for full-KYC PPIs issued by banks, such as debit and credit cards. Now with these new rules, even a payments wallet or a prepaid card can be used to withdraw cash at ATMs, micro-ATMs and eligible Point of Sale (PoS) terminals.

“The measure, in conjunction with the mandate for interoperability, will give a boost to migration to full-KYC PPIs and would also complement the acceptance infrastructure in Tier III to VI centres,” Das stated.