"Wallet players as of now are not part of the system. The banks felt that these players already have a very good solution with them and therefore including them will not be in their interest as they are competing against them and therefore they had requested to keep the players out," said a senior official who is a part of the team that is working on launching UPI.
The Payments Council of India, which represents these wallet players, had communicated to the National Payments Corporation of India (NPCI) that they would like to be part of the UPI system. However, they have not been included so far.
The official clarified that even though UPI was not launched to take on the wallet players, their exclusion seems to indicate otherwise.
These non-banks players had an edge in the mobile wallet space as they had the first movers' advantage and had already began to establish themselves before the banks jumped in the fray. These players had cashed in on the rise of smartphones and offered safe and simpler transactions to consumers, giving them a case to move to digital money and ditch cash.
By using this UPI application a customer can transfer money to another person through a unique virtual address (virtual addresses are aliases to a bank account allowing a customer's account to be uniquely mapped), or mobile number, or Aadhaar number. And therefore, customers do not need to know the payee's IFSC code, bank account details, etc thus making the process simpler.
Now, as the wallet players believe that with the banks having the UPI advantage, the market will get tougher and therefore these players have been looking at diversifying the business to add additional revenue channels.
“We are still hopeful that we may be allowed to be a part of the UPI as we can also play a crucial role in reducing cash transactions. However, in the short-term, some players might face some problem and might have to look at adding another business line to see how they can reduce the impact,” said Naveen Surya, managing director, ItzCash.