Digital wallet companies are worried. Strict government regulations are set to throw them out of the business. The new challenge for digital wallets has come in the form of know-your-customer (KYC).
The Reserve Bank of India (RBI) had set a deadline for digital wallet companies to fulfil KYC norms for all their users by February-end. However, less than 10 per cent of such customers have got their KYC done, claimed an ET report.
The KYC deadline is too close now, almost a week-time before deadline get closed. If these norms are implemented in full force, the industry will end up losing 90 per cent of their customers.
In October last year, the RBI had directed prepaid payments instrument (PPIs) or digital wallets to complete full KYC of their users. It means that the companies are required to collect self-declaration of name and unique identification number of any of the officially valid documents.
Thus, most of the prepaid payment instruments operating in India are now asking users to link the wallets with their respective Aadhaar numbers.
The RBI’s guidelines were then criticised by industry experts. They highlighting the fact that minimum KYC norms allow small-value domestic remittance transactions to go digital through mobile wallets and at retail outlets. If asked for full KYC compliance, these consumers will move on to bank branches or business correspondents (BC) of banks, where no such requirements are mandated.
Industry body Payments Council of India has requested RBI to look into the issues plaguing the industry. Early this week, RBI also met with industry representatives and heard out their grievances related to the revised PPI guidelines.
RBI has once extended the KYC deadline from December-end last year to February-end this year. Industry experts say there is hardly any reason to believe the regulator might reconsider imposition of its full KYC requirement.
The development was first reported by ET.