View: Unified Payments Interface may not kill mobile wallets

Chaitanya Gudipatymoneycontrol.comThere is no denying that India has started its march towards a cashless future. Payment apps and mobile wallets are a testament to that and there’s no doubt that the launch of ambitious Unified Payments Interface (UPI) will only bolster this charge.The Internet is inundated with prophecies of the impending doom that a full-fledged UPI rollout spells for mobile wallet operators, but there are enough indicators to contradict such opinions. For starters, operations of digital wallet companies such as Paytm, MobiKwik and Freecharge aren’t just limited to person-to-person money transfers. They offer additional services like utility payments, mobile recharges, movie tickets and taxi operator payments.Secondly, while a case can be made in favour of UPI that it offers a much higher transaction limit of Rs 1 lakh, wallet operators are catching up revising their strategies. Currently, transactions on payment wallets for non-KYC verified users are capped at Rs 10,000 per month under Reserve Bank of India guidelines. The government’s UPI push will only accelerate their plans to implement Know Your Customer (KYC) policies which will allow them to raise the limit to Rs 1 lakh.Paytm has launched KYC service and has set up centres where wallet users can submit documents for KYC verification. Besides, it has plans for e-KYC verification through Aadhaar to make the process an entirely digital affair. Similarly, Mobikwik too has started KYC for its users.Next, digital wallets are becoming a commonplace in urban India for small-ticket transactions like booking railway tickets, movie tickets, cab fare payments, bill payments, among other daily purchases. Digital payment ecosystem is yet to become big in smaller cities and towns. This presents a huge opportunity for all players — UPI-enabled or otherwise.Also, measures such as KYC and UPI bring in a method to track taxable transactions which now take place offline and are not tracked. The increasing number of digital payment modes will reduce the volume of cash transactions in the society, which go unreported and are not subject to tax.Instead of prophesising about the death of digital wallets, UPI should be cheered as a win-win situation for the country’s citizens and cashless economy. The launch will only push all fintech players to create an environment where carrying cash and using netbanking or debit/credit cards will become redundant.The need of the hour is to create a payments network which is conducive to both customers and merchants. Digital transactions should become integral to offline retail as well.