In the past weeks, the Reserve Bank of India (RBI) has introduced some stringent regulations for e-wallets such as mandatory full Know Your Customers (KYC), phased introduction of interoperability and restriction of peer-to-peer fund transfer in semi-KYC wallets.
According to the RBI, the regulations aimed to encouraging competition and innovation, and strengthening safety and security of operations, besides improving customer grievance redressal mechanisms.
However, digital payment companies feel the new norms will harm the industry and thus, they are seeking changes in some of the stipulations.
The Payments Council of India, an industry grouping, has already written to the central bank seeking a hearing on issues they deem as “critical” to the nascent payments industry.
“Some of the new norms could severely cripple the industry and make the wallet business unviable,” said one person talking to ET.
“We have already reached out to the Reserve Bank of India. We are expecting to meet senior officials in the central bank and raise our concerns regarding the stringent provisions in the prepaid instrument (PPI) licence guidelines,” he said.
The payment companies also feel that the prohibition of inter-wallet transactions, along with transfer of funds from bank account to wallet from semi-KYC accounts will destroy the relevance of mobile wallets.
Digital wallets have largely been viewed as a preferred mode of fund transfer for small value and among people who cannot easily open a bank account. The domestic remittance business is based on mostly migrant workers using prepaid instruments to send money regularly back home. “The major problem they face is of an address proof as they keep travelling to different places in search of work.
For them, doing a full-KYC to open a digital wallet every time will be a major hindrance for smooth business,” said the founder of a Mumbai-based payments company.