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Why Transfer of Funds Between Mobile eWallets Bad for Banks ?

RBI has allowed the transfer of funds facilities between different Mobile eWallets. Now any of the mobile ewallets users like PayTm, Mobikwik, Oxigen, Freecharge etc may transfer of money between themselves i.e. from PayTm to freecharge or Oxigen or Mobikwik or Jio Money.  Earlier it was restricted by RBI under Prepaid Instruments Guidelines or PPI’s.

RBI has announced to open the UPI (Unified Payment Interface) framework for these digital wallets.  Due to this interoperablility will be operational and digital wallets may be able to transfer the funds between themselves. This will allow you to send payments to anyone irrespective to the mobile wallets of their choice.

RBI has announced that 

Inter-operability amongst KYC compliant PPIs shall be implemented within six months of the date of issuance of the revised master directions, which will be issued within a week, i.e. by October 11, 2017

Why this is bad for Banks ?

This new initiative once get operational, Banks will start facing the heat as there is a fear of loosing the float money of customer i.e. Lower balance in Saving or Current account of customer. Other reason may be :

  1. Very few of the Banks especially nationalized banks has eWallets facilities for their customer
  2. Customer will keep their Saving account balance in Online Payment banks like PayTm payment banks or Airtel Payment bank or anyother
  3. This will help them in easiness in online shopping
  4. They may get interest on their balance by these banks like PayTm and Airtel are offering higher interest rate on balances
  5. Digital wallet players will get less dependent on the banks

There is naturally a tougher time ahead for nationalized banks if they don’t focus and revive their Digital banking strategies.


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