<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/banner-1.webp" alt="M2P Fintech" title="" width="100%" height="610">On April 7, the Reserve Bank of India made several key announcements concerning <a class="link" href="https://m2pfintech.com/blog/disruptive-business-enablers-prepaid-payment-instruments-ppis/">Prepaid Payment Instruments (PPIs)</a> at the Monetary Policy Committee (MPC) meeting. These measures could potentially impact the banking/Fintech sector and bring about changes in Digitalization and <a class="link" href="https://m2pfintech.com/blog/fintech-a-catalyst-for-financial-inclusion/">Financial Inclusion.</a><h2 class="heading-node" id="04b0" style="text-align: justify">Interoperability of digital wallets is now mandatory</h2>All full-KYC PPIs and Payment Acceptance Infrastructure must be compulsorily interoperable.<a class="link" href="https://m2pfintech.com/blog/why-payments-interoperability-is-a-must-for-todays-generation/"> Interoperability</a> through <a class="link" href="https://m2pfintech.com/blog/upi-the-driver-of-economic-growth-and-inclusion/">UPI</a> among digital wallets was already achieved by RBI back in 2018, but it wasn’t a very widely used method for payment transfer. Now to extend the reach of digital rails, interoperability through UPI or otherwise, has been made a mandatory feature.<h2 class="heading-node" id="b0ff" style="text-align: justify">Increase in permitted outstanding balance</h2>A payments bank can now raise the limit of the end-of-day balance to INR 2 lakhs (previously INR 1 lakh). This move is to incentivize PPIs to move to a <a class="link" href="https://m2pfintech.com/blog/know-your-customer-kyc-the-need-for-authentication/">full-KYC</a> structure and interoperability. The new move is expected to encourage financial inclusion of a wider customer base.<h2 class="heading-node" id="eda2" style="text-align: justify">Cash withdrawal from digital wallets</h2>Digital wallet holders can withdraw cash from their prepaid wallets at ATMs and/or swipe to pay at retail establishments. Previously, cash withdrawal was allowed only for full KYC PPIs issued by banks. The recent move brings uniformity among PPI players and bolsters the banking infrastructure, particularly in underserved areas. Bringing wallets at par with Bank Accounts in terms of service offering.<h2 class="heading-node" id="d9bb" style="text-align: justify">RTGS and NEFT enablement</h2>It is proposed that PPI issuers, card networks, White Label ATM operators, and Trade Receivables Discounting System (TReDS) can now take membership in CPS (Centralized Payment Systems) and access Real-time gross settlement (RTGS) and National Electronic Funds Transfer (NEFT). It was previously restricted to banks. This move is expected to improve the services of PPI issuers to their customers and minimize settlement risk.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/image.webp" alt="M2P Fintech" title="" id="tbptd8z27" width="100%" height="610"><h2 class="heading-node" id="3a06" style="text-align: justify">What does it mean for the Banking sector and Fintech?</h2>Through these recent announcements, the RBI has opened up the extent of Banking services, to larger Fintech players. It is expected that this move will help relieve stress on traditional banks that cater to a wide base with limited legacy technology.Fintech players can take over the load, offer banking services (except credit offering) on par with traditional banks, and penetrate underserved areas of India. It will further increase the penetration of digital payments in the country especially the Tier-3 to Tier-6 centers. According to RBI, these new guidelines will promote the optimal utilization of Payment Instruments like wallets, cards, etc. as infrastructures such as PoS devices, ATMs, QR Codes and Bill-payment touchpoints are still scarce.Though banks will continue to handle the crucial aspect of lending, it will be interesting to see how PPIs, wallets, and other payment systems will now compete in the banking ecosystem. It will be an evolving process for Fintech companies who are partnering with the PPI license holders to issue co-branded prepaid cards for providing loans to their customers. The array of services that these Fintech’s offers will diversify and they will be able to ensure user satisfaction by providing <a class="link" href="https://m2pfintech.com/blog/neo-banking-101-all-you-need-to-know/">Neo-banking</a>-like facilities.These announcements acknowledge the capabilities of Fintech players and the gaps in the system that they can effectively fill. This is also an endorsement of the enormous potential of the industry. It remains to be seen how payment companies ride this wave, innovate, and offer end-customers seamless payment experiences.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

RBI’s new guidelines for PPIs. How will it impact the Fintech industry?

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-1-copy-8-16.webp" alt="M2P Fintech" title="" width="100%" height="383"><blockquote class="block-node" id="taxe2h50t">UPI transactions clock 1.61 billion transactions worth Rs 2.98 trillion in AugustDigital payments up by 23% with transactions valuing at a record high of $113.4 Trillion</blockquote>Source- Business Standard<blockquote class="block-node" id="osu78ucl8">India will provide approx. 2.2% of the world’s digital payment by 2023 — Pwc &amp; PCI</blockquote>Amazing right! In the race between digital payments vs. cash, the former is definitely taking the lead. Right from a cash-dependent economy to cashless transactions, we slowly see the shift. This trend is now fueled by the pandemic, COVID-19. Starting right from cards to UPI, digital payments have taken over in both online and offline methods. Nevertheless, UPI payments are setting up a record high as 1.61 billion transactions.But this is not the first time that digital payments have seen a spike in our country. The history-defining move of Demonetization brought digital payments to the fore. Many opened bank accounts or started using their bank accounts for depositing their cash reserves. Incidentally, it also prompted many to dust their debit cards.Soon, several incentives and schemes were introduced to encourage this transition. Also, the year 2016 saw a significant milestone with the introduction of UPI in August. Coupled with the availability of the internet, digital payments had the right boost. Starting from grocery stores to street vendors, UPI, and other modes of digital payments had taken root.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-10.webp" alt="M2P Fintech" title="" id="ah9a6k969" width="100%" height="383">It was a great learning curve, with many technology players coming to the forefront. Innovating payments and user experience became a priority. But after a while, the spike plummeted as currency notes and coins rose in circulation.Now, the onset of the pandemic and nation-wide lockdown has made people embrace digital payments. The pandemic has also brought forth a two-pronged result where businesses are going digital, and some are losing their footing. But, the retail section seems to have stayed afloat by going digital. So, what took four years to adopt is now the norm within months of lockdown. With new customers on the rise, merchants are currently searching for tailored and localized payment solutions.COVID has pushed people to adopt online shopping where digital payments rule and cash on delivery is frowned upon. Even those who are tactile by nature are now supporters of online shopping. Online grocery shopping is now on an all-time high with e-commerce spearheading the cause.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-9.webp" alt="M2P Fintech" title="" id="s6b81zced" width="100%" height="383">So, it puts forth the question of how digital payments got back their spotlight?COVID has made people wary of physical contact, so digital payments were the only solution. Also, here are a few more points that answer the above question:<ol class="list-node" id="erdc35dw2"><li>It requires minimal or zero contact. Minimal contact if it is cards and zero contact if paying through UPI or mobile wallets.</li><li>You don’t need to carry a loaded wallet as right from cab drivers to popular stores, digital payments are available.</li><li>Forget rummaging around for change; your card or wallet will let you pay the exact amount.</li><li>It is there 24/7, and you don’t need to spend long hours outside the ATM standing in those social distancing circles patiently waiting for your turn.</li></ol>Recently, a study conducted by The Red Seer Consulting deduced that India’s digital payment will reach Rs.7,092 trillion by 2025. And that is not all; Digital payments are now the favored choice of the millennials. They have gone through a shift of reluctant usage to a must-have tool for every day.To know more digital payments write to us at <a class="link au mg" href="mailto:business@m2pfintech.com" target="_blank" rel="noopener ugc nofollow">business@m2pfintech.com</a>.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Tag: "Upi (29)"

Product

About

Compliance

Resources