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Thanks But No Thanks, Telcos Say To Govt’s Aadhaar KYC Amendments

Thanks But No Thanks, Telcos Say To Govt’s Aadhaar KYC Amendments

Telecom players may opt for QR-based KYC method instead of Aadhaar

UIDAI directed that companies will have to pay fee for each KYC process

According to COAI, Aadhaar KYC is too expensive for telecom companies

After a long but frantic searching for alternatives, the Indian government on March 2 came up with amendments to allow private companies to use Aadhaar data for verification. However, now telecom players have said that they may not use Aaadhaar-based verification processes as it is proving too expensive.

Following Unique Identification Authority of India’s (UIDAI) directive that private companies will pay a fee of INR 20 ($0.2) for each eKYC transaction and 50 paise for authentication of the unique ID, telecom companies have said QR code-based authentication may be a more economical option.

“The industry body, discussed the matter of Aadhaar charges as per the Gazette Notification (March 6, 2019) issued by UIDAI, with its three members and concluded that the indicated charges of INR 41 for every new customer is an expensive proposition,” Rajan S Mathews, director general of Cellular Operators Association of India told Inc42.

Mathews added that the telecom players are preferring to use existing method of electronic verification which includes using Aadhaar generated QR code by the customer, as one of the documents that may be used for verification.

In December 2018, it was reported that the central government and the Reserve Bank of India (RBI) were mulling over the use of an ‘offline Aadhaar’ verification system which will operate on QR codes instead of biometric.

Aadhaar regulator UIDAI had imposed the changes on the private entities and also added that if an organisation does not wish to pay authentication transaction charges then it will have to discontinue its use of Aadhaar authentication services.

The Supreme Court had scrapped Section 57 of Aadhaar Act barring private companies from using Aadhaar details. This ruling came as a major blow to the fintech and telecom operators who majorly relied on Aadhar-based authentication process.

Following this, in October 2018, the telecom sector had suggested voluntary use of the Aadhaar number for e-KYC (know-your-customer)process or introducing a legislative framework in order to reintroduce the Aadhaar eKYC process.

In order to comply with the ruling, the Department of Telecom (DoT) had also issued new guidelines to provide telcos with an alternative to conducting the eKYC process. It had suggested the use of live photographs and customer acquisition form (CAF) for completing the process.

After a lot of debate and discussions, the central government approved promulgation of an ordinance which will now allow voluntary use of Aadhaar by private entities.

According to the ordinance, private entities are allowed to use Aadhaar authentication only when they are compliant with the standards of privacy and security specified by the authority.