RBI directive to e-wallet companies – like Paytm, Mobikwik, Ola Money & Amazon Pay – mandates the need to meet full KYC norms for all.
The Reserve Bank of India (RBI)’s know your customer (KYC) rule has become a major threat for the online wallet companies – while almost Rs 12000 crore or 80 percent of the online wallet transactions from across the country face the risk to go back to cash, as companies fear to lose their customers.
The RBI directive to e-wallet companies, like Paytm, Mobikwik, Ola Money, Amazon Pay and Sodexo, mandates the need to meet full KYC norms for all customers by February 28. Making it tougher for the e-wallet users, the minimum KYC norms will be restricting the customers from sending money to other wallets or banks. Customers will also be restricted from keeping more than Rs 10000 in their e-wallet.
To meet the complete KYC requirements, e-wallet users will have to submit their photograph – if he or she is not a minor – along with a copy of an officially valid document containing their identity details, address details and photograph.
A senior executive at an online wallet company, “We have not even managed to finish 50 percent of the customers’ KYC. There is no motivation for the customers to do the KYC; they’d rather prefer to go back to a convenient option of cash than do the documentation.”
While most customers have only provided minimum KYC information, mobile wallet companies are jittery following the RBI KYC directive. Earlier in October 2017, the RBI directed e-wallet companies to make sure that the payment instruments issued by them were updated to meet full KYC norms by February 28.
According to an official of the e-wallet industry, “It is sad and regressive; RBI is being irrational in this. Our ultimate fight is with cash and this business is about commerce and not banking, hence KYC is not critical. Banks anyways are not doing banking properly and they want to do payments. We are not even part of UPI, so we are not in competition as well.”
VP Financial Services Amazon Pay, Sriram Jagannathan – who is also the co-chair of Prepaid Payment Instruments (PPI) committee under Payments Council of India (PCI) – said that the early results of the strict RBI norms has resulted in 30 percent drop off in the e-wallet’s customer base.
“Customers opt for cash since they cannot load money without furnishing additional details,” said Jagannathan.
While the Payments Council of India (PCI) had earlier asked the RBI to withdraw the full KYC requirement or at least extend the given deadline, the RBI is yet to respond to any such demands.
A senior executive at PCI said, “This is actually de-digitisation by the Reserve Bank of India (RBI). Now, of the Rs 14,000 crore (monthly wallet business) Rs 12,000 crore is at risk. For the next one year, the growth of the wallets will definitely under huge stress.”