Some of India’s top mobile wallet companies have requested the Reserve Bank of India (RBI) to provide an alternate solution to eKYC for user onboarding and verification. They said that the physical verification of user details for eKYC is increasing their costs and is a time-consuming process, especially in non-metro cities.
According to report, the Payments Council of India (PCI), an apex body representing companies in payments and settlement system, has also asked the regulator to extend the deadline for converting minimum-KYC accounts to full-KYC accounts to February 28, 2020, on account of the recent restrictions on the use of eKYC.
As per the updated norms issued last year, mobile wallets that conform to a minimum-KYC format (such as simple verification of mobile number) will have convert to full-KYC format. A minimum KYC is generally done via phones using OTP, while a full-KYC requires physical verification or a biometric check.
Soon after the norms were announced, MobiKwik committed $61.6 Mn (INR 400 Cr) over the course of five years to comply with the eKYC requirements of its customers. Paytm, on the other hand, earmarked over $500 Mn over a period of three years to reach a target of 500 Mn full-KYC wallet.
The PCI letter also proposes that a user with a minimum-KYC account should be able to do a peer-to-peer transaction up to INR 10,000 a month, on top of the $136.5 (INR 10,000) limit for making payments for products and services. At present, minimum-KYC wallets cannot send money to other wallet holders.
“In the event that the prepaid payments instruments (PPI) industry may have to revert to paper-based KYC, we expect the cost of service to customers will increase manifold. Besides the cost, it will be difficult to receive physical documents from rural areas and interiors of India and there may be inefficiencies related to its compliance. Hence, such an unforeseen increase in operating cost shall impede the growth of the PPI industry, which has worked relentlessly towards the proliferation of digital payments in the country,” the letter said.
Executives of digital wallet firms have said earlier that for interoperability (say, an Oxigen user sending money to a JioMoney user) to succeed, the accounts must be KYC compliant, wallet companies have argued that they invested heavily in building digital infrastructure for complying with RBI’s KYC mandate.
According to a report, the Indian mobile wallet market is forecasted to gain immensely during the forecast period of 2018-23 to reach around $7 Bn by 2023, with increased internet penetration and digital awareness leading the way.