Mobile wallet companies, which grew leaps and bounds post demonetisation, are now going to suffer and expected to lose millions of customers as the new regulations have kicked-in.
The Reserve Bank of India’s (RBI) mandatory know your customer (KYC) rule for all Prepaid Payment Instruments (PPI) will cause the loss of more than 40 per cent mobile wallet user base, a Business Standard report said.
At a time of the end of the deadline for KYC, which was on February 28, there were more than 500 million mobile wallet users on Paytm, Mobikwik, Amazon Pay, PhonePay, and others, combinedly.
These wallets are going to lose over 200 million users as they failed to do the required KYC.
Industry experts say a large number of mobile wallet users seem to have chosen to not update their KYC details for now. It appears compliance requirement for issuers is deterring customers from transacting through PPIs. However, it is difficult to predict whether these users will update the KYC details later.
The KYC process demands the physical presence of users at different wallets’ partners which verify user’s Aadhaar details and capture their biometrics.
The experts have also emphasized the fact of excluding wallet companies from such KYC process and PPIs include low-value, low-risk and high-frequency transactions.
Last week, industry body Payments Council of India (PCI) 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.
The RBI’s move will affect wallet companies against UPI-based apps such as Google Tez and Whatsapp Payments. The UPI-based companies allow direct transfer of money from one account to another via mobile numbers.
Google Tez has tied up with over 100 partners such as PVR, Docomo, BSNL, BSES, Grofers, Jet Airways and many other companies.
This week, Google Tez integrated with State Bank of India (SBI), allowing customers of India’s largest lender to transact directly from their bank accounts through the mobile payments app.
As of now, Google has partnered with four banks SBI, HDFC Bank, Axis Bank and ICICI Bank to allow users of Tez app to create their bank’s UPI handle and transact directly from their bank accounts on the app.