Prepaid wallets risk losing business as RBI’s KYC deadline ends tomorrow
27 Feb 2018
A Reserve Bank of India (RBI) directive to online wallet companies that they meet full KYC (know your customer) norms for all their customers on or before 28 February, has put these companies at risk of losing all business.
The deadline is too short that the almost Rs12,000 crore, or 80 per cent of online wallet transactions in the country are at risk of going back to cash, as online wallet players fear losing customers because of the RBI's KYC norms.
The RBI directive will hit wallet companies like Paytm, Mobikwik, Ola Money, Amazon Pay and Sodexo hard as it will be difficult to meet the 28 February deadline for bringing all their customers under KYC by 28 February.
Minimum KYC comes with certain restrictions where the customer will not be able to send money to other wallets or bank accounts, or keep more than Rs10,000 in their wallet.
In order to complete the full KYC requirement, customers need 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.
Customers have become so dependent on payments companies and more and with more and more shoppers switch from cash to paying for purchases by smartphone or other mobile devices, the mandatory compliance of KYC norms by wallet companies within the deadline will put both customers and sellers at great risk, say experts.
RBI, however, said there will not be any extension to the 28 February deadline for mandatory KYC-compliance by prepaid wallet customers.
However, customers who have balances in such wallets or prepaid payment instruments (PPIs) need not worry about their money even if they do not do the KYC (know-your- customer) norms, the central bank said.
''Sufficient time has already been given to meet the prescribed guidelines. In the event PPI issuers not obtaining the KYC-related inputs within the timeline from their customers, customers will not lose their money,'' deputy governor B P Kanungo told reporters here on Monday evening.
There are 55 non-banking PPIs operational now, apart from 50 wallets promoted by banks. They were initially given time till December 31, 2017, to make those accounts KYC- compliant, which was extended to February 28.
According to media reports, PPIs were feeling that the KYC requirement was very challenging and if the guideline were to be implemented, they fear losing business as 90 per cent customers have been onboarded using the minimum KYC, which is giving the telephone number.
The PPI industry also feels that if KYC is done for mobile phones, the same should take care of security concerns.
''The guidelines are designed to strengthen safety and security of transactions and customer protection,'' Kanungo said, adding KYC requirements are necessary to usher in inter-operability.
As per the master directions issued on the matter last October, the RBI wants to make inter-operability between the PPI wallets and also with bank accounts and cards possible.
Apart from paying for purchase of goods and services, PPIs are used extensively for remittances currently, which offers a very lucrative business opportunity for agencies involved in carrying out remittances.
As per the law, a customer can fulfil the KYC requirements by submitting any document like the Aadhaar number, voter ID, among others.
