Less than half of wallet users have opted for the know your customer (KYC) process, as defined under the master direction on issuance and operation of prepaid payment instruments (PPIs) issued by the Reserve Bank of India (RBI) on October 11, 2017, industry players told FE. This means that issuers of mobile wallets may lose over half their customer base once the February 28 deadline for completing KYC for all wallet users expires. The payments industry has sent a request to the RBI to ease the KYC norms for small-value payments. Vinay Kalantri, founder and managing director at The Mobile Wallet, which operates under the brand name tmw, said it would be unrealistic to expect all his wallet users to turn KYC-compliant by the end of this month. “We have around 30-40% of our wallet customers who are full-KYC. It’s impossible that the whole set will migrate,” he said.
Most wallet users are unlikely to opt for full KYC, as that would take away the convenience associated with wallet payments. It would bring the process of signing up for a wallet as cumbersome as that of opening a bank account. “On wallet players, there will definitely be an impact. So far, the number of customers that have opted for KYC is not very large. It is not a very significant percentage (of customers),” said an executive with a fintech company which offers a wallet, among other digital products and services.
Gaurav Chopra, executive director at lobby group Payments Council of India, said the cost of carrying out KYC — at around Rs 70-100 per user — is also prohibitive for issuers of wallets. “In addition, there will be the cost of devices (for KYC authentication), which would be over Rs 3,000 for each device,” he added.
If the central bank does not accede to the industry’s request, Kalantri says, PPI issuers will have to look for other lines of business. Some have already taken that route, diversifying their product suite. Earlier this month, Mobikwik said it would invest $10 million in other financial products and launched a digital solution to digitise corporate processes, rewards and reimbursements.
PayU India shut down its eponymous wallet in January. While it continues to issue the Citrus wallet, it has now shifted focus to consumer lending. The Mobile Wallet has acquired Trupay, a company engaged in the business of equipping offline merchants with solutions to accept digital payments. ENDS