Wallet interoperability facilitates lending and payment transactions

According to the RBI notification, the interoperability of the wallets was to be done in three stages. First, wallet companies would join the Unified Payments Interface (UPI). Second, wallets could transfer money to bank accounts on UPI, and third, wallet companies would be allowed to issue prepaid Rupay cards.

It’s the prepaid card fintech companies are using to deliver new lending and payment offerings. Let’s take a look at them.


Currently, only two holding companies are in line with interoperability: Transcorp International Ltd and Transerv Pvt. Ltd, in which Indiabulls Ventures Ltd had taken a stake. Transcorp International’s model is based on partnerships with other companies and the offering of co-branded prepaid cards as well as the provision of payment infrastructure.

Using Transcorp International’s payment infrastructure, a fintech company for EarlySalary loans recently launched a loan card, which the company dubbed Salary Card; it allows borrowers to set different spending limits for specific categories.

Suppose EarlySalary issues a card to a borrower with Limit of 2,000,000. The borrower can use the company app to set different borrowing limits for hospital, online spending, dining out, etc. The borrower, for example, can define Limit of 1.5 lakh if ​​the card is swiped at a hospital and 20,000 for online purchases.

The cardholder can also set the duration for different categories. For hospitals, for example, the individual can choose a duration of 12 months; for online purchases, six months; etc “Right now we have five categories where the customer can use the card. These include shopping, electronics, travel, hospital and medical care, insurance and education,” said Akshay Mehrotra, co-founder and CEO of EarlySalary.

The company does not charge any processing fees when the borrower uses the card and there are no prepayment fees. The minimum limit for each transaction is 3,000. Interest rates vary by seniority and the company charges a maximum of 28% for a 12 month loan.

The card works like a credit card with more options for users. If the borrower misses the payment, there are bounce fees as well as interest on the outstanding balance.

For the first time, borrowers can decide the spending limit based on end use, which can help them limit borrowing for each category. Depending on the interest rate and repayment capacity, customers can, for the first time, also choose the term of the loan, offering greater flexibility than ordinary bank loans.

The card also allows the lender, EarlySalary, to know the end use of the funds, which is not possible in a personal loan. The company can use this to provide a higher limit and, in the future, negotiate with merchants to offer better rates or free EMIs to its borrowers.


Another fintech company, Kashware, is using the interoperable wallet infrastructure to develop a card with which users can connect all of their debit cards, credit cards and wallets. Instead of carrying multiple cards, the user will have to carry one card from Kashware, and before making the payment, he can select the card he wants to use.

What happens in the background is that when the person chooses a specific wallet or card, Kashware charges that card or wallet to make the payment. As the card is on the RuPay network, Kashware Kard works on all machines (POS terminals), websites and even ATMs. It is also a National Common Mobility Card (NCMC) and also works for public transport payments (in metros, toll booths and others).

“Our services – physical card and app – ensure that an individual’s real card numbers are not exposed during a payment,” said Sidhant Ryan Malhotra, co-founder and CEO of Kashware. “The physical card we plan to offer will be numberless. The card number will only be visible in the app, which keeps all transactions, offers and rewards from all other payment accounts in one place.”

Consumers would not only need to carry a single card instead of multiple cards, which is convenient; they also enjoy better security because the Kashware card is numberless. The company has also ensured that the cardholder does not miss any rewards from the issuer.


Services offered by fintech companies could also have been provided in partnership with a bank, as banks have always been allowed to offer prepaid cards. “But banks have strict internal compliances, which take a long time to get approved. With a non-bank, it’s much faster to go live,” Mehrotra said.

Another problem fintech companies face when partnering with banks is that the banks own the customers. Fintech companies only receive a commission. If EarlySalary, for example, had tied up with a bank, the loan would have been made by the bank and the loan would not be on EarlySalary’s books.

“A prepaid payment instrument (PPI) business like ours respects customer ownership. Most banks also have legacy systems and are inflexible in many ways because payments are not their primary business “We are able to sign up with multiple fintech companies in the area of ​​payments for more flexibility and our low-cost bundled model, which includes licensing and technology,” said Ayan Agarwal, vice- President of Transcorp International.

While RBI and National Payments Corp. of India (NPCI) have started offering wallets on UPI, consumers can expect more such innovations. There could also be a possibility where you add money to the wallet using a credit card and make the payment through the UPI, which will make all payment instruments interoperable, the experts shared in the past.

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