Digital wallet companies on Wednesday welcomed the RBI’s decision to increase the limits on mobile wallets spend to Rs 20,000 for users and to Rs 50,000 for merchant bank transfers in view of the cash crunch following demonetization of high-value currency.
Earlier, the balance limit for these semi-closed prepaid instruments (PPIs) was not more than Rs 10,000 during a particular month, with no particular guidelines for the opening of PPIs for such merchants. The new measures will be effective between November 22 and December 30.
“RBI ‘s steps will accelerate the adoption of mobile wallets in the country and ease the challenges being faced by the common man and local shopkeepers due to cash crunch. This move will lead to remarkable growth in usage and adoption of mobile wallets, which is the need of the hour as we have a mammoth task in hand, that is to support a cashless India and lead change from an urban city to a rural village,” co-founder MobiKwik, Upasana Taku, said in a statement.
“We have heard the challenges regarding wallet limit, first hand from our users, especially sellers, and some of those would exhaust their Rs 10,000 limit within a week and then struggle with the woes of dealing in cash in these times,” she added.
Doubling the limit for wallet users, the Reserve Bank of India on Tuesday said in a statement: “The limit of semi-closed Prepaid Payment Instrument (PPI) that can be issued has now been enhanced from Rs 10,000 to Rs 20,000.”
“Funds transfer from such PPIs are permitted only to the merchant’s own linked bank account and upto an amount of Rs 50,000 per month, without any limit per transaction,” the statement further read.
Chief Executive Freecharge, Govind Rajan said in a statement: “This is a big move for unorganised merchants. It will give them a real alternative to using cash and will promote the digital payment habit.”
“Given the quantum jump in digital wallets usage in recent days, this increase in limits makes it easier for both users and merchants to shift more of their cash transactions to digital wallets. The progressive policies of the RBI and the government’s prompt resolution of industry issues will go a long way in building a cashless India. This doubling of limits will have an immensely beneficial impact for users and small merchants,” he added.
RBI has announced these measures till the end of the current calender year.
Since demonetization, India has witnessed a massive surge in the use of digital wallets. For instance, the percentage of the first time users of FreeCharge has seen a massive 15X surge, which effectively makes every fourth consumer loading FreeCharge wallet a first time consumer.
Similarly, MobiKwik recently said that the company has seen a 150 per cent jump in its merchants base since the Government’s announcement of demonetizing Rs 500 and 1000 currency notes. From a 100,000 merchant base in the pre-currency ban, the company has seen an addition of new 150,000 merchants already and now has a network of over 250,000.
While Paytm, India’s largest mobile payments and commerce platform, has been witnessing over 7 million transactions worth Rs 120 crore a day, helping it cross US$ 5 billion GMV sales, four months ahead of its target.
The RBI’s decision solves an immediate problem for users, who were faced with a choice of doing many smaller value transactions or some higher value ones. The previous limit of Rs 10,000 restricted the option to use the wallet for higher value transactions, including travel bookings, utility payments and purchase of high value goods on e-commerce sites.
With this increase, customers will now be able to use their wallets for both everyday transactions as also other episodic usage. Merchants too would benefit immensely as they can now transfer higher amounts to their bank accounts without worrying about hitting the monthly limits.
(With inputs from IANS)