KYC Rules Driving Away Mobile Wallets Users; Firms Report 95% Loss In Transactions!
RBI has made it clear that KYC rule is mandatory for all users of any financial instrument, and this includes mobile wallets as well.
Reserve Bank of India has made it clear that KYC or Know Your Customer rule is mandatory for all users of any financial instrument, and this includes mobile wallets as well.
March 1st, 2018 was the deadline for all users of such wallets to complete their KYC process.
After almost 2 months of this deadline, the effects are clearly visible: Users are not interested to complete their KYC, and they don’t mind stop using them as well.
If we believe reports, then up to 95% of transactions are down.
In other words, KYC norm is killing the success of Digital India.
Will RBI reconsider their decision now?
Mobile Wallets Transactions Down By 95%!
This has resulted in a massive drop in transactions, across all wallets. Though users can consume their existing cash parked in the wallets, they have refused to complete their KYC as well. Which means no new transactions.
Amazon India has come out and announced that 95% of their transactions on Amazon Pay have vanished.
An Amazon representative has said,
“Cash loads have reduced by 95%. This will mean lower digital payment adoption in the long run, especially as we expand further into smaller cities and towns. We are losing an opportunity to engage customers who typically do not use electronic instruments.”
We had already reported that this strict KYC rule can impact 80% of all wallet users in India.
Amazon Pay is normally used by Amazon users to pay for their deliveries or receive refunds. But now, it seems that the same users are opting for cash on delivery or using any other mode of digital transaction, but not wallet anymore.
What Is The Problem Here?
The problem is that the end user is fed up with complying with KYC rules, which has been a focal point for RBI and Govt.
Phone, driving license, bank account, PAN and even rail tickets have been linked with Aadhaar or any other form of KYC: And now, mobile wallet too.
It seems that user fatigue and saturation for the KYC issue have set in.
As per Sunil Kulkarni, joint managing director of Oxigen Services, less than 10% of all wallet users have their KYC done, and this is hampering the overall usage and transactions.
“The industry average is still in the low single digits for the number of people who have done their KYC out of the total number of users of mobile wallets,”
Another official from a wallet firm told that there have been no incentives announced for completing KYC, which can be another reason for the decreased enthusiasm.
If the trend continues, then RBI will have no option but to take take the mandatory KYC rule, and maybe make the process a little less strict.