RBI has issued a notification mandating interoperability amongst Prepaid Payment instruments (PPI) cards and PPI e-wallets issued by banks and non-banks. The interoperability should be enabled by 31st March, 2022. This is only for customers who have fulfilled the entire Know-Your-Customer (KYC) criteria. Interoperability shall be mandatory on the acceptance side as well.
RBI in its notification dated 7th April, 2021 had also increased deposit limit for payment banks to Rs. 2 Lakh per individual customer from Rs. 1 Lakh. the limits for Prepaid instruments has also been increased from Rs.1 Lakh per individual customer to Rs. 2 Lakh per individual customer.
What are Prepaid Payment Instruments (PPIs)
PPIs are pre-loaded cards/digital wallets. For example, Sodexo offers PPI cards wherein companies can deposit funds onto employees’ meal cards which can be used on Sodexo’s network for purchase of food and non-alcoholic beverages. PPI e-wallet apps such as PayTm or Phonepe allow customers to deposit funds into the app so that they can spend the funds through the app itself.
In its notification, the RBI has exempted PPIs for Mass Transit Systems and Gift PPIs from complying with this instruction, although Gift PPI issuers can offer interoperability if they want.
What is Interoperability?
In simple terms, Interoperability means that regardless of who issues the PPI Card or e-wallet, customers can use that any payment acceptance terminal. Under this, PPI card holder can swipe their card at any merchant outlet that has a card swiping machine.
UPI is interoperable but PPI e-wallets are not. Through this announcement of RBI, customer can for example transfer their PayTm wallet money to PhonePe wallet.
RBI has said the feature of cash withdrawal will be permitted in case of full-KYC PPIs issued by non-bank PPI issuers as well, with the maximum limit of ₹2,000 per transaction and an overall limit of ₹10,000 per month per PPI. Additionally, all cash withdrawal transactions performed using a card/wallet shall be authenticated by an Additional Factor of Authentication (AFA)/PIN.
Issuers shall put in place suitable cooling period for cash withdrawal upon opening the PPIs or loading/re-loading of funds into PPIs to mitigate the risk of fraudulent use of PPIs. Further, 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 ombudsmen schemes and instructions on limiting liability of customers.
RBI has said the cash withdrawal limit from Points of Sale (PoS) terminals using debit cards and open system prepaid cards issued by banks in India has been rationalised to ₹2,000 per transaction within an overall monthly limit of ₹10,000 across all locations (Tier 1 to 6 centres).