RBI prohibits Mobile network operators from offering mobile wallet facility

September 7, 2012

The RBI asserted that it will not permit mobile network operators to offer cash-out or mobile wallet service.

Why RBI has asserted this?

As per RBI, mobile wallet is basically an e-money product and therefore permitting mobile network operators provide this facility may bypass banking regulations.
However, RBI allows transactions if mobile network operators operate their services as business correspondents of banks.
RBI is concerned because of security issues related to the quality of flow, Anti-Money Laundering rules and Know Your Customer rules.

What is Mobile Wallet?

Mobile wallet which is also abbreviated as M-Wallet, is a an electronic account that is linked to a person’s mobile phone in which money can be electronically deposited and the same can be used as cash.

Utility: Internationally, M–Wallets are used to pay for goods at stores, pay for public transportation, make donations and pay bills.