RBI Turns Focus to EV Wallets After Taxi App Collapse Sparks Consumer Concerns

The Reserve Bank of India (RBI) has started informal consultations with electric vehicle (EV) charging operators and other app-based EV platforms to review the growing use of closed-loop wallets. This move follows rising concerns over consumer safety in India’s expanding digital payments ecosystem, especially after a recent incident involving a failed ride-hailing service.

Closed-loop wallets under scrutiny

Closed-loop wallets are app-specific digital wallets that allow users to store money and use it only within the same platform, unlike open wallets regulated by the RBI, such as Paytm or PhonePe, which can be used across various platforms. Since closed wallets aren’t directly monitored by the central bank, they pose greater risks to users in the event of a company shutdown.

This risk became a reality when users of a popular EV-based taxi app, BluSmart, were unable to retrieve funds they had stored in the app wallet for booking airport and intra-city rides. Following its collapse, BluSmart informed users in April that refunds could take up to 90 days, leaving many without access to their prepaid balances and raising alarm bells across the ecosystem.

Regulatory response in the works

Although the RBI has not yet made an official announcement, sources familiar with the matter said that the central bank is considering stronger regulatory safeguards for such platforms. One proposal being discussed is to mandate escrow accounts for wallet balances — a measure that would protect users’ money even if the platform fails.

Another idea under consideration is extending certain provisions of the Prepaid Payment Instruments (PPI) guidelines to these closed-loop systems, especially when they operate at scale. These changes could fundamentally alter how app-specific wallets function in India, bringing them closer to the regulatory framework applied to mainstream digital payment systems.

What it means for India’s digital economy

If implemented, these steps could have wide-ranging implications for India’s digital economy. Many EV platforms and service-based apps rely on prepaid wallets to build customer loyalty and ensure frequent usage. Tighter oversight could make operations more transparent and consumer-friendly but may also increase compliance burdens on startups and digital service providers.

As of now, the RBI has not taken a formal stance, but reports suggest that a meeting with stakeholders may take place in the coming weeks to discuss the path forward.