In accordance with the road map provided earlier by its Master Direction, the RBI has issued the consolidated guidelines on October 16, 2018 for enabling interoperability between Prepaid Payment Instruments (PPIs).
These guidelines enable wallet to wallet transfers and is likely to increase the use and acceptability of the payment wallets. PPIs issued in the form of wallets will be entitled to enable interoperability through UPI. Further, participating PPI’s will have to adhere to the technical specifications / standards / requirements as well as the reconciliation and grievance redressal mechanisms of National Payments Corporation of India (NPCI), which will facilitate the PPI issuers’ participation.
PPIs which are issued in the form of cards, will be entitled to enable interoperability in association with card networks. It opens up the whole domain of card payments to them, though such PPI Issuers will be required to follow all the technical requirements of the card networks such as membership type and criteria, merchant onboarding etc. PPI issuers operating in specific segments such as meal, gifts and money transfer services may also implement interoperability.
PPIs which have been issued in the form of wallets are required to adhere to the requirements of the sponsor bank arrangements in the UPI for settlement purposes.
Certain other salient provisions of the guidelines are:
a) PPI issuers are required to have a board approved policy for achieving interoperability.
b) Interoperability shall be facilitated on all KYC compliant accounts.
c) The new PPIs issued in form of cards would need to be EMV chip and PIN compliant. Participants will have to ensure that re-issuance / renewal of PPIs in form of cards is also EMV chip and PIN compliant. However, gift cards and cards for Mass Transit Systems (MTS) can be issued with or without EMV chip and PIN enablement.
For interoperability through UPI, PPI issuers shall link only their own customers’ wallets to the handle issued by NPCI and shall onboard only their own customers and not of any bank or other PPI issuer. The authentication i.e. checking the user’s identity will be completed by the PPI holders as per their existing wallet credentials and hence the transaction will be pre-approved before it reaches the UPI.