The Reserve Bank of India has increased the limit for semi-closed pre-paid wallet limit to Rs 20,000 from Rs 10,000. After the ban of high-value currency, the government is taking several measures to encourage people to use electronic mode for making payments.
Now most of the individuals have shifted to mobile for making payments. There are different types of m-wallets available and they differ when it comes to payments and KYC norms.
Here are few things to know when using mobile wallets.
Pre-paid payment instruments are type of payment solutions which can be used to purchase goods and services, including funds transfer, against an amount which is stored in such instruments. The amount in pre-paid instrument can be transferred by cash, by debit, or by credit card.
The pre-paid instruments include smart cards, internet accounts, internet wallets, mobile accounts and mobile wallets.
These are usually issued by business houses or e-commerce companies, where some amount of money is locked with the merchant in case of a cancellation or return of the order.
Closed payment instruments issued can be used to purchase goods and services from him or business. These instruments do not permit cash withdrawal or redemption. No third party payments and settlement are allowed in such instruments.
Flipkart.com, Jabong.com, and Makemytrip.com offer closed wallets.
Semi-closed wallets such as Paytm, which do not permit cash withdrawal or redemption, but will allow you to buy products at merchants which have tied up with them and also allows to perform financial services at listed locations.
As per RBI "these are payment instruments which can be used for the purchase of goods and services, including financial services at a group of clearly identified merchant locations/ establishments which have a specific contract with the issuer to accept the payment instruments".
Other semi-closed wallets are Oxigen Services and Citrus Payment.
Open System Payment
Open System Payments like m-Pesa from Vodaphone, ICICI Bank can be used for purchase products, including funds transfer at any card accepting merchant locations and also permit cash withdrawal at ATMs.
Semi-Open System Payment
Airtel Money is a semi-open wallet, which will allow the customer to transact with merchants at PoS that have a tie-up with Airtel. You can't withdraw cash or get it back. Another example for semi open is Gift Cards issued by banks.
KYC for Mobile wallets
The RBI increased the limit to Rs 20,000 from Rs 10,000 for which minimum details of the customer is required. The outstanding amount in a wallet at any point of time should not exceed Rs 20,000 during any given month.
For amounts between Rs 20,000- Rs 50,000 official valid documents should be submitted and will be issued only in electronic form.
If an account is full KYC compliant, the limit on the wallet is Rs 1,00,000 and the balance should not exceed Rs 1,00,000 at any point in time.
Mobile wallets have become one of the fastest way to do financial transaction such as recharges, bill payments, bus tickets, shopping etc., can be done at finger tips.
Using mobile one can send and receive money instantly unlike before when transferring funds would require beneficiary information like account number, IFSC code etc.
There is a limitation when it comes making payment as maximum amount which can be used in wallet is Rs 20,000 in a month. There is also a restriction depending merchant tie ups.
Individuals will not receive any interest for amount available in mobile wallets.
There is always a risk if you lose your mobile, since many wallet don't require additional level of authentication.