As you now know, digital payments can be made through plenty of different modes. To ensure that the payment ecosystem functions in a seamless and organized manner, the need for rules and regulations to govern the digital payment infrastructure is at an all-time high. 

 

However, as far as India is concerned, the Reserve Bank of India (RBI) has been doing an excellent job of keeping the entire digital payment landscape united and functioning like clockwork. Interested to know about the various regulations surrounding digital payments? 

 

In this chapter of Smart Money, we’re going to take a look at just that; and also the various RBI guidelines for e-wallets. So let’s begin. 

 

RBI Guidelines for Digital Wallets

Before we move onto the other rules and regulations governing digital payments, let’s quickly get a brief overview of the ones applicable for e-wallets. Several digital news outlets have reported that the Reserve Bank of India has issued updated guidelines for mobile wallets. 

 

And that this has been done to ensure that there’s standardization and uniformity across the various players; especially since there has been an exponential increase in the usage of mobile wallets. These rules also seek to protect the end-user as well. Here are a few highlights of the RBI guidelines for e-wallets. 

 

• The maximum limit of funds that mobile wallets can hold at any point in time was increased to Rs. 2 lakhs from the erstwhile Rs. 1 lakh. 
• RBI has made it mandatory for digital wallet providers to ensure interoperability from FY23. Interoperability will however be enabled only for individuals who have completed a full-KYC. 
• Mobile wallets can be used to withdraw cash through ATMs and other means to the tune of up to Rs. 2,000. 
• For transactions via digital wallets, a two-factor authentication system is required to be implemented. 

 

As you can see, the RBI guidelines for digital wallets are quite extensive in nature. It not only clarifies a lot of ambiguities, but also provides enough protection for the end-user. 

 

That said, none of the above-mentioned RBI guidelines for e-wallets will be applicable to closed wallets. They would, in turn, be applicable only to semi-closed and open wallets only.  

 

Other rules and regulations around digital payments 

Now that you’ve seen the various RBI guidelines for digital wallets, let’s now focus on the rules and regulations governing other forms of digital payments. Here’s a quick look at a few of the most important ones. 

 

 

• Rules governing auto-debit transactions

 

The Reserve Bank of India, in a bid to make digital payments more secure and transparent, has introduced a new rule governing auto-debit transactions. According to this regulation, banks are mandatorily required to alert consumers before and after an auto-debit transaction. Banks that have failed to do so will have to suspend all auto-debit transactions on customers’ debit and credit cards. 

 

 

• Framework allowing offline digital payments 

 

With the aim of pushing digital payments in rural and semi-urban areas of the country, the RBI has recently come out with a framework that allows offline digital payments that don’t require internet connectivity. According to the regulations, individuals can make offline digital payments to the tune of up to Rs. 200 per transaction, with an overall limit of Rs. 2,000. 

 

 

• Limits governing digital payments 

 

The Reserve Bank of India has imposed several minimum and maximum transaction limits for various types of digital payments. Here’s a quick look at a few of them. 

 

• The minimum transaction limit for IMPS is Rs. 1 and the maximum limit is Rs. 5 lakhs. 
• The minimum transaction limit for RTGS is Rs. 2 lakhs, with no maximum limits. 
• The minimum transaction limit for NEFT is Rs. 1, with no maximum limits. 
• The minimum transaction limit for UPI is Rs. 1 and the maximum limit is Rs. 1 lakh.

 

 

• Operating times for various digital payments 

 

With a view to increase the adoption of digital payments, the RBI has removed all operating time limits for digital payments like NEFT and RTGS. Currently, all digital payments including UPI, IMPS, NEFT, and RTGS are operational 24/7. 

 

 

• Rules governing contactless card transactions 

 

To make it easier for individuals to make digital payments, banks, over a couple of years, have been introducing contactless credit and debit cards. These cards utilize an NFC chip that allows customers to pay by simply touching the POS machine. 

 

The Reserve Bank of India, to prevent misuse of the contactless payment system has limited the amount of transaction that can be made through this system to Rs. 5,000. Any transaction above this limit would have to be made through the traditional way by entering the PIN. 

Wrapping up

These are just a few of the many rules and regulations surrounding digital payments. And as we continue to move towards digitizing the entire payments economy, we can expect more such regulations akin to the RBI guidelines on e-wallets. 

 

A quick recap

 

• The maximum limit of funds that mobile wallets can hold at any point in time is Rs. 2 lakhs.
• Mobile wallets can be used to withdraw cash through ATMs and other means to the tune of up to Rs. 2,000. 
• Banks are mandatorily required to alert consumers before and after an auto-debit transaction.
• Individuals can make offline digital payments to the tune of up to Rs. 200 per transaction, with an overall limit of Rs. 2,000.
• All digital payment methods including UPI, IMPS, NEFT, and RTGS are operational 24/7.
• To prevent misuse of the contactless payment system, the amount of transaction that can be made through this system is limited to Rs. 5,000.