Assessment of Service Quality of Payment Wallet Services in India Using the Servqual Model

Evolution of Payment Wallets

Payment banks are a new model of banks which have been established by the Reserve Bank of India (RBI) (Pramani&Iyer, 2022). On January 7, 2014, the Committee on Comprehensive Financial Services for Small Businesses and Low-Income Households, chaired by Mr. Nachiket More, recommended, among other things, that a new type of banks called payment banks be formed (RBI, 2014). On November 27, 2014, RBI released the Guidelines for Licensing of Payment Banks. As per these guidelines, payment banks can accept a deposit of up to Rupees One Lakh per customer. These entities are not allowed to issue loans or credit cards (Reddy, 2018). Further, payment banks require a minimum capital of Rupees One Hundred Crore, and most importantly they have to compulsorily invest 75% of their assets in government securities (Veluvali, 2019).

On July 01, 2015, (updated on July 01, 206) RBI published the Circular Master on Policy Guidelines for Issuing and Operating Prepaid Payment Instruments in India. This was a milestone for the entire online wallet service providers like Airtel Money and PayTm who were earlier conducting their businesses as payment banks in India (Moorthy et al. 2022)

Requirement of Payment Wallets

After the “Payment and Settlement Systems Act, 2007” came into force, banks and non-banking entities had started to conduct the business of providing pre-paid payment instrument, mostly in a web based platform (Esoimeme, 2018). RBI had been providing approvals to these entities under the guidelines of the Master Circular on Issuance and Operation of PPIs issued on April 2009 (Roy, 2021). Thus, taking into account the rapid digitization within India and development made in their respective field by PPI issuers, it became important to have a consolidated document prescribing the guidelines.