How you'll be able to withdraw cash from mobile wallets at ATMs

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The Reserve Bank of India (RBI) allowed cash withdrawal and merchant payment from prepaid instruments (PPIs) such as mobile wallets in its latest monetary policy announcement.

The central bank also allowed PPIs to become part of centralized payment systems — RTGS (real-time gross settlement) and NEFT (national electronic funds transfer).

The developments bring wallets at par with bank accounts, enabling them to withdraw cash from ATMs. However, the former do not have an account number. Wallet companies do not own ATMs either. So, how can you withdraw money using these wallets at ATMs or pay at a merchant?

"Wallets will issue a prepaid card to their customers. Using the card, they can withdraw money at ATMs and swipe the card at merchant stores," Praveen Dhabhai, director and chief operating officer, Payworld Money, told Mint. Payworld Money is a payments company that also operates a mobile wallet.

The Reserve Bank had earlier issued guidelines on the interoperability of wallets. This allowed wallets to offer money transfer via UPI (Unified Payments Interface) and issue prepaid cards on networks such as RuPay and Visa in October 2018. Until now, this was optional, and there were few takers. But in the recent monetary policy review, the central bank has made it mandatory for PPIs to be interoperable.

According to the notification, interoperability would happen in three phases. First, wallets will join UPI. Second, wallets would be allowed to transfer money to a bank account using UPI. In the final phase, PPIs will be allowed to issue cards. Some volunteering companies have already started issuing cards.

Currently, mobile wallets cannot use Aadhaar Enabled Payment System (AEPS), which banks offer. That is because most users do not link their wallets to the Aadhaar card, Dhabhai told the newspaper.