The Reserve Bank of India is reportedly drafting guidelines that will allow for direct money transfers between the apps of different mobile wallet providers, removing the need for a traditional bank.
Direct transfers between different providers are expected to become a reality within the next quarter, as the RBI puts the finishing touches to the new measures. The interchange fees that providers can charge each other will be defined by the RBI.
The advent of direct money transfers taps in to a wider push to increase the availability of digital payments across India. Currently, transferring money between different providers’ apps requires access to India’s Unified Payment Interface (UPI), which is a protocol that the RBI instated to allow banks to move money between accounts held with separate companies.
Since traditional banks have access to the UPI, they are typically required as intermediaries. The RBI is seeking to offer providers access to the UPI so that they can expand the services they deliver and cover more subscribers. While this would allow wallet providers to sideline traditional banks for certain transactions, the reliance on existing underlying bank accounts would likely mean that the relationship remains intact.