Thursday, September 3, 2015

Should eWallets India’s Money Transfer Service Scheme (MTSS) Collaborate?


          One of the most preferred channel for personal money remittances from abroad to beneficiaries residing in India is Reserve Bank of India’s Money Transfer Service Scheme (MTSS).

          Only inward personal remittances into India such as remittances towards family maintenance and remittances favouring foreign tourists visiting India are permissible. No outward remittance from India is permissible under MTSS.

          RBI under  the powers of  Section 10 (1) of the Foreign Exchange Management Act (FEMA), 1999, the Reserve Bank of India has to accord necessary permission (authorization) to any person to act as an Indian Agent under the Money Transfer Service Scheme.

No person can handle the business of cross-border money transfer to India in any capacity unless specifically permitted by the Reserve Bank.

The system envisages a tie-up between reputed money transfer companies abroad known as Overseas Principals and agents in India known as Indian Agents who would disburse funds to beneficiaries in India at ongoing exchange rates.

The Indian Agent is not allowed to remit any amount to the Overseas Principal. Under MTSS the remitters and the beneficiaries are individuals only. Commercial transactions are strictly banned under MTSS.

Only cross-border personal remittances, such as, remittances towards family maintenance and remittances favouring foreign tourists visiting India shall be allowed under this arrangement. Donations/contributions to charitable institutions/trusts, trade related remittances, remittance towards purchase of property, investments or credit to NRE Accounts shall not be made through this arrangement.

To ensure that MTSS participants adhere to all the local regulations, periodical reporting to Reserve Bank of India must be done in the specified formats.

A yearly cap of US $ 2500 has been placed on individual remittance under the scheme. Amounts up to 50,000/- may be paid in cash to a beneficiary in India. Any amount exceeding this limit shall be paid by means of account payee cheque/ demand draft/ payment order, etc., or credited directly to the beneficiary's bank account only.

The only exception is in case beneficiary is a foreign tourist; higher amounts may be disbursed in cash.

Only 30 remittances can be received by a single individual beneficiary under the scheme during a calendar year.

In India primarily there are two types of MTSS 01) Foreign companies authorised by RBI for  Cross border Money Transfer – in-bound only 02) Indian Banks having their foreign inward remittance facility


List of Foreign companies authorised by RBI for  Cross border Money Transfer – in-bound only
1.     Bahrain Financing Company, BSC (C)         Brand  Money Transfer Service (MTSS)– cross border in-bound service (customer to customer) known as “EzRemit”       
2.     Continental Exchange Solutions Inc, USA Brand  MTSS- cross border in-bound service (customer to customer) known as “Ria Money Transfer”    
3.     Globle Foreign Exchange Inc., Canada       Brand  MTSS- cross border in-bound service (customer to customer) known as “Transfast”         
4.     MoneyGram Payment Systems Inc, USA.   Brand MTSS- cross border in-bound service (customer to customer) known as “MoneyGram or MoneyGram International”
5.     Royal Exchange (USA) Inc., USA   Brand  MTSS- cross border in-bound service (customer to customer)
6.     UAE Exchange Centre LLC, UAE    Brand  MTSS- cross border in-bound service (customer to customer) known as “Xpress Money”      
7.     Wall Street Exchange Centre LLC, UAE   Brand  MTSS- cross border in-bound service (customer to customer) known as “Instant Cash”    
8.     Western Union Financial Services Incorporated, USA          Brand  MTSS- cross border in-bound service (customer to customer) known as “Western Union or WU”

 Prepaid Instruments or Mobile Wallets or eWallets

Pre-paid payment instruments are payment instruments that facilitate purchase of goods and services, including funds transfer, against the value stored on such instruments.

The pre-paid payment instruments that can be issued in the country are classified under three categories viz. (i) Closed system payment instruments (ii) Semi-closed system payment instruments and (iii) Open system payment instruments.

          Reserve Bank of India permission is required to issue PPIs in India.Banks who comply with the eligibility criteria would be permitted to issue all categories of pre-paid payment instruments.

However, only those banks which have been permitted to provide Mobile Banking Transactions by the Reserve Bank of India shall be permitted to launch mobile based pre-paid payment instruments (mobile wallets & mobile accounts).

 Non-Banking Financial Companies (NBFCs) and other persons would be permitted to issue only closed and semi-closed system payment instruments, including mobile phone based pre-paid payment instruments.

11 Benefits of MTSS Corporations tying up with PPI Issuers:-

1)     A new disbursement channel for MTSS corporate.

2)    A new partner for PPI Issuers

3)    Exclusive offers can be rolled out by PPI Issuers and MTSS Corporations

4)    Enable PPI Issuers to increase the average size of their eWallets

5)    Enable beneficiaries to enjoy the benefits of Digital Markets

6)    Enable PPI Issuers to increase their eWallets base

7)    Enable MTSS Corporations  to increase their remittance base

8)    Spread the joy of ‘LessCash’ transactions to remote places in country

9)    Boost the purchasing power of beneficiaries

10)  Increase customer stickiness both at PPI Issuers end and MTSS Corporations end


11)  In line with Prime Minister Narendra Modi’s vision of Digital India