SUMMARY
The development comes at a time when the digital payment companies such as PhonePe are not accepting Aadhaar for KYC
The process of customer validation is becoming a more difficult exercise since UIDAI has disabled mobile number-based Aadhaar authentication for unlicensed entities
Paytm Payments Bank had reached 100 Mn KYC wallets in April
The Reserve Bank Of India (RBI) is reportedly monitoring the monthly status reports by mobile wallets companies on how many of their customers have completed authentication/the know-your-customer formalities (KYC) as directed by the regulator.
The development comes at a time when the digital payment companies such PhonePe are not accepting Aadhaar for the RBI’s mandatory Know Your Customer (KYC) user validation process for mobile wallets since the UIDAI has not yet responded to their application for obtaining KUA (KYC user agency) licence.
Reportedly, the mobile wallets have registered a huge loss as transactions dropped significantly due to stricter KYC norms that the RBI instituted last October.
According to RBI, mobile wallets with minimum customer details such as mobile number and validated using a government-recognised identity proof can be valid only for twelve months, post which full-KYC is needed to keep the wallet active.
A full-KYC requires physical verification or a biometric check and a minimum-KYC can be done via a mobile handset using a one-time password.
Earlier, the mobile wallet companies were using number-based authentication for KYC but the process of customer validation is becoming a more difficult after UIDAI has disabled mobile number-based Aadhaar authentication for unlicensed entities.
The digital payments industry had written to the central bank to delay implementation of its stringent customer verification rules until mobile wallet service providers are allowed to access the Aadhaar database for user authentication.
Earlier, it was reported in April that Paytm Payments Bank has reached 100 Mn KYC wallets, as a result of its efforts to educate users about the benefits of KYC, and out of the total 100 Mn KYC wallets, around 76 Mn have been authenticated biometrically.
The RBI had announced in February that the facility to deposit money into wallets shall be withdrawn if the wallets aren’t KYC-compliant. On October 11, 2017, the RBI had issued Reserve Bank of India (Issuance and Operation of Prepaid Payment Instruments) Directions, 2017 (Master Direction), making KYC compliance mandatory for prepaid payments instruments (PPI) such as wallets by February 28, 2018.
[The development was reported by ET]
