Increased proliferation of internet in the modern-day life has facilitated multiple operations to be conducted over a click of a button. Numerous business transactions and banking activities have found virtual media as their new work space leaving behind the days which required efforts and human labour for the same purposes. This has lead to elevation in the levels of digital payments.

Online Payments in India

India finds a vast segment of its population now dependent on technology for carrying out number of transactions. The Government has also made efforts for promoting cashless mode of dealings through the digitalization.

Online payments in India are regulated by the National Payments Corporation of India (hereinafter referred to as “NPCI”) which is the organisation for operating retail payments and settlement systems in India. The unified payment interface (hereinafter referred to as “UPI”) is an instant real-time payment system developed by NPCI and regulated by Reserve Bank of India (hereinafter referred to as “RBI”) that facilitates inter-bank transactions occurring on the web-platform. E-payments platforms such as net-banking, online credit/debit card operation, use of e-wallets (such as Paytm, Mobikwik, OlaMoney, Jiomoney, PayZapp, SBI Buddy, etc.) have come up in the Indian market.

Interoperability of Prepaid Payment Instruments

Interoperability is the technical compatibility that enables a payment system to be used in conjunction with other payment systems. In order to facilitate the interoperability between prepaid payment instruments (hereinafter referred to as “PPIs”) such as e-wallets and cards by allowing them to transfer money to one another is now possible attributable to the RBI Guidelines for Interoperability in respect of PPIs (hereinafter referred to as “Interoperability Regulations”) dated October 16, 2018.[1] Participating PPI issuers, who choose to adopt interoperability shall ensure adherence to the enclosed guidelines. Some of the features of the said Interoperability Regulations are stated below:

  • Where PPIs are issued in the form of wallets, interoperability across PPIs shall be enabled through UPI.
  • Where PPIs are issued in the form of cards, the cards shall be affiliated to the authorised card networks.
  • All PPI issuers intending to implement interoperability through UPI and / or card networks shall adhere to the instructions contained in Interoperability Regulations including membership type and criteria, merchant on-boarding, adherence to various standards, rules and regulations applicable to the specific payment system such as technical requirements, certifications and audit requirements, governance, etc.
  • The interoperability shall be facilitated to all KYC compliant PPI accounts and entire acceptance infrastructure.
  • PPI issuers shall adhere to all dispute resolution and customer grievance redressal mechanisms as prescribed by the card networks / UPI.

In the wake of rise in the number of electronic operations being carried out in India presently, the aforesaid Interoperability Regulations ease the carrying out of transactions removing the hurdles of restricted usage through the limited media.