Mobile wallet companies are feeling the pinch and are grappling to get their customers to comply with the Know Your Customer (KYC) norms, even as the Reserve Bank of India’s (RBI) deadline for completing such verification ended on 28th Feb, 2018. Operational issues such as linking of Aadhaar with bank accounts and restrictions on money transfers and loading funds into wallets have dealt a setback to the payments industry. Market experts say that the average ticket size of each transaction is less than Rs 3,000 and done mostly by migrant labourers who come to the digital platform as there was no KYC requirement for the same. They are likely to be impacted the most.
“Full KYC process is tedious, complicated, expensive and also cumbersome for many people. KYC norms for users of mobile wallets will be a deterrent to the growing wallet industry and that it might also kill smaller transactions. 90 per cent of the transactions that occur on wallets are remittances. The deadline of the submission of KYC came during the Holi festival, a time when remittances are the highest. A large percentage of the wallet users for remittances are blue-collared workers, taxi drivers, daily wage labourers and others,” Praveen Dhabhai, COO, Payworld, told THE WEEK.
He further explained that people in rural areas are scared of the lengthy paper work and lack of understanding of the processes and products and do not mind borrowing from local money lenders even at high interest rates due to less or no paperwork. “For minimum KYC, wallets remittance should be allowed by Mobile OTP confirmation, as all mobile numbers will be linked with Aadhaar numbers as per government directives by March 31, 2018. Mobile OTP confirmation should be good enough,” added Dhabhai.
This expert believes that the biggest challenge at present is creating an eKYC infrastructure, that includes the installation of biometric devices, training retailers on how to do eKYC and educate the customers about benefits of eKYC. “We are doing this through our distributor network, sales team and our call centre. We feel that once this infrastructure is in place we will be back to normal remittance transaction count as the end customer is any way coming to Payworld retailer point for doing the transaction,” said Dhabhai.
On the other hand experts such as Charlie Lee, the CEO, Balance Hero India Pvt Ltd feels that it would be a tough situation for players like them. “From the government’s perspective, it’s a well thought out action for securing digital transaction but it will take time to convert medium KYC users, who are in majority, to full KYC users. It is a tough situation for PPI (Prepaid Payment Instruments) holders like us who have more medium KYC users than full KYC users and thereby require the government’s support to sustain both policy and business.” said Lee.
Experts such as Subramanyam S., the CEO of AscentHR feel that the KYC will be challenging for mobile wallet companies. “The very objective of demonetisation leading towards digital payment solutions gets defeated by insisting on KYC for digital wallets instead of limiting transaction value. The country endured a difficult phase of the cashless economy and supported the decision in principle of unearthing unaccounted money and the target should not be the small fish when big fish is nonchalant.”
On the other hand experts such as Bhavik Vasa, Chief Growth Officer at EbixCash is of the viewpoint that interoperability, is a step-forward for the eco-system where the regulator has yet again supported and committed interoperability across all payment systems of Rupay and UPI alike. “This step will further widen the market. We await affirmative timelines for its implementation,” remarked Vasa.