So far, companies have been able to verify just a fraction of their total user base, and are yet to complete biometric or physical verification of the majority of users, industry executives told ET.
“More than 95% of the mobile wallets in the country could stop being operational by March,” said a senior executive with a New Delhi based payments company.
The payment industry has been scrambling to conform to central bank guidelines issued after the Supreme Court’s judgement on Aadhaar – the unique identification number— that barred private companies from using the database for paperless verification of customers.
“There is no eKYC, the RBI has not told us anything clearly about the alternate KYC mechanisms that they plan to approve,” a senior payment executive told ET. “The deadline is just a few weeks away and we cannot adhere to (it) with this rate of progress,” he added.
There have been discussions around alternate KYC mechanism like using video-based verification or XML based KYC, but neither has been formally approved by the banking regulator.
“We are waiting till January 8 that is the last day of the winter session of the Parliament, let us see what happens to the Aadhaar Bill,” said another payment industry executive. “We will reach out to the RBI and ask for the next course of actions.”
Mobile wallets kick started the Indian digital payment revolution about four years ago but now only a few such companies have remained in the fray. Most of the PPI licence holders like Mobikwik, PhonePe and Amazon Pay are either pushing very hard on the Unified Payments Interface business or have diverged into other fintech activities.
“A large chunk of the wallets which were used for remittance have anyway moved to the Business Correspondent channels because of regulatory restrictions,” said a senior industry executive.
“Only standalone wallets will be directly affected by the (current impasse),” he added.
Sachin Seth, fintech leader for India, Middle East and Africa for Ernst and Young told ET that consumers would not have any compelling reason to use wallets simply for transaction purposes except in cases where they can manage within limits set for minimum KYC wallets.. “Convenience of (opening wallet accounts) using eKYC does not exist anymore so sustenance of wallets is all about coverage of merchant ecosystem and partnership driven use cases,” he said.
After the central bank directed wallets to become full KYC compliant payment instruments in 2017, companies like PhonePe, Amazon Pay and Paytm began asking customers for identification documents.
Paytm, which had received a banking licence, went all out to use biometric dongles and field agents to convert its existing wallets into full KYC ones and to also open bank accounts. A company executive estimates that Paytm has managed to convert 70% of its user base into full KYC ones.
But, other payment companies have struggled. “We have undertaken the first stage of identification, but without biometrics how do we accomplish the full verification, that would mean we need to get paper documents collected and verified which means jump in cost of operations and feasibility challenges,” said one of the sources cited above.
These companies are hoping that the Parliament approves pending legislation, which allows voluntary use of the Aadhaar number by consumers for online as well as offline verification,
“Looking at the convenience factor consumers would opt for Aadhaar verification, but it all depends on how the Act is passed, till date it would have helped if we could get some assurance from the central bank,” said one of the executives quoted above.