Indian Mobile Payments Market’s New Holy Grail: Interoperability

March 14, 2018         By: Steven Anderson

Interoperability is a wonderful thing, as far as technology goes. With interoperability in some fields, businesses can continue to use older technology, because it works with newer systems that are coming out and prevents the need to buy huge new slugs of systems. Interoperability is similar in the mobile payments market, or at least that’s so in India, where a growing body of firms are getting together on a settlement account that will let credit and debit transactions alike be settled by the National Payments Corporation of India.

Normally, that would be the province of merchant payments, but if the mobile payments industry had access to such a settlement account, it would likely result in discount rates for payment processors that were formerly only enjoyed by merchant operations.

That wasn’t the only case that the mobile payments industry could raise for interoperability, as a recent note dispatched to the Reserve Bank of India (RBI) made clear, reports noted. One of the biggest points for an interchange framework, as it was called, is that mobile wallets would effectively become part of the banking industry. Such a move would actually improve customer safety; only those providers who have staged know-your-customer processes can get in on the interoperable network.

A senior payment executive was also quoted as saying “If wallets are also given payment service provider (PSP) status, then through the handle that the customer creates they can transfer funds to other wallets as well as to bank accounts, which can in turn push merchant payments. We have also told RBI that we will meet all the security standards set for participants across vulnerability testing, penetration testing, etc.”

Essentially, mobile wallet systems in India are looking to trade security for access to better scope and operations range, which would effectively make mobile payments better for the end user. Discounts will likely mean lower fees to the end user, and greater security is always a demand for the end user’s operations. So if the mobile payments industry in India gets its way, the end result would likely be positive for the end users.

Only time will tell just where this all ends up, but it’s safe to say interoperability in mobile payments may be coming soon after all.