The Reserve Bank of India (RBI), in its latest monetary policy has allowed the cash withdrawal as well as merchant payment from prepaid instruments (PPIs) such as mobile wallets. Digital wallets have also been allowed by the banking regulator to become part of RBI’s centralized payment systems—RTGS (real-time gross settlement) and NEFT (national electronic funds transfer).
This new development has brought wallets at par with bank accounts. But then a question arises that since wallets do not have an account number or own ATM for that matter, how can one withdraw money from any of the ATMs and how can one pay at a merchant?
If these things bug you, then the story is for you. Kindly read to know more.
How Does One Withdraw Cash?
Directorr & COO of a payments company that also has a mobile wallet named Payworld Money, Praveen Dhabhai said that these wallets shall issue a prepaid card to their customers which in turn can be used to withdraw money at ATMs and swipe the card at merchant stores.
Interoperability Mandated By RBI
RBI, in October 2018, had issued guidelines on the interoperability of wallets which allowed them to offer money transfer via UPI (unified payments interface) and also issue prepaid cards on networks RuPay and Visa.
However until now, there were takers for it and also it was optional. In the recent monetary policy review, the RBI has made mandated the interoperability for PPIs.
The interoperability, according to the notification, would happen in three phases:-
- Wallets shall join UPI
- Wallets will be allowed to transfer money to a bank account using UPI
- They will be allowed to issue cards
Some of the companies which volunteered have already started issuing cards.
As most users don’t link their wallets to Aadhaar, presently wallets use Aadhaar Enabled Payment System (AEPS) which banks offer, said Dhabhai.