Obopay gets a wallet licence from the Reserve Bank of India

Payments company Obopay has received a wallet licence from the Reserve Bank of India (RBI) and it looks like the company wants to beef up its operations in India in India. The licence was given in October 2017 and is valid up to 31 December, 2022, the RBI website showed.

Obopay has a chequered history in India but it did pioneer mobile payments in the country. It had started as a payments service in 2005 in Silicon Valley and made an entry to India along with YES Bank in 2008 to run a mobile payments service for Java-based phones and Blackberry. The company had raised more than $144 million Nokia, Citigroup, Essar Communications, Qualcomm Ventures, Elephant Capital among others.

Obopay was powering the back-end operations of Nokia Money, a mobile wallet service launched by the phone manufacturer along with Union Bank of India (UBI) in 2010.  The company said that its customer base in India had crossed one million users in 2011 and was projected to grow further. Most of the company’s revenue was locked in with Nokia Money and Obopay imploded when Nokia Money decided to shut down its operations in 2013. Most investors started to downgrade their investment in the company. Elephant Capital wrote off its investment in the company completely.

Obopay was sold in a fire sale and was taken over by two former Infosys employees Paddy Padmanabhan and Rajiv Kuchhal. However, it seems that the company is making a comeback right now as it bagged a $15 million contract in October from Banque Atlantique in Africa offering digital banking platform, as indicated by this The Economic Times report. The company also said that it is looking to get a strategic investor on board for beefing up its technology.

Other wallets issued

Wallet guidelines

However, Obopay will have to deal with the RBI’s onerous guidelines and deal with increased net worth requirements and KYC and most likely link the wallets with Aadhaar. Wallet issuers will also have to submit the list of merchants acquired by it to the escrow bank and update the same from time to time.

However, the guidelines did dangle interoperability for wallet companies who complied with the increased KYC norms. In the first phase, wallet issuers (both bank and non-bank entities) shall make all KYC compliant wallets interoperable amongst themselves through the UPI within 6 months. This means that a user can transfer money from a Paytm account to a MobiKwik account if they are KYC compliant. Subsequently, it will allow interoperbility with bank accounts and cards as well.

Number of wallet transactions

For the month ending September 2017, number of transactions using Prepaid Payment Instruments (which includes both Mobile Wallets and PPI Cards combined) decreased by 8% to 240.29 million as compared to 261.4 million in August 2017, and grew 148% compared to 97.07 million in September 2016.

*Correction: A spokesperson for Obopay reached out to MediaNama and pointed out some errors in the earlier version of the story. This has been rectified and reflects the same now. The mistake is regretted. 

SOURCE:MEDIANAMA