95% Of Mobile Wallets in India Can Shutdown In Next 50 Days – Is Your Digital Money In Danger?
KYC issue is threatening the very existence of mobile wallets in India.
Ever since Supreme Court struck down Section 57 of the Aadhaar Act, and banned private companies from using and storing Aadhaar data of Indians, KYC or Know Your Customer issues have been hampering their growth.
Now, the logjam over KYC has become so serious, that by February end, over 95% of mobile wallets in India can stop functioning, and all fund can be frozen.
What is the solution?
95% of Wallets Can Stop Working
In October, 2017, RBI had mandated that every PPI or Prepaid Payment Instrument (which is the technical name for mobile wallets) has to complete KYC or Know Your Customer process for their customers.
The final deadline for this activity was March 1st, 2019.
Now, every mobile wallet was focussing on Aadhaar based KYC, and they were successful in completing KYC for more than 70% of their users.
But, then came the Supreme Court verdict on Aadhaar Act in September last year, and ever since then, every plan went haywire.
Mobile wallets cannot use Aadhaar for KYC, and this means, KYC process has come to a screeching halt.
At the point of time, more than 95% of mobile wallet users have no KYC, and as per RBI’s deadline, they can be stopped from functioning after March, 2019.
A senior executive from a mobile wallet company said, “More than 95% of the mobile wallets in the country could stop being operational by March,”
What Is The Solution?
Alternate KYC for customers, without using Aadhaar can be the only solution.
But for that, mobile wallet and payment companies need to unleash a nation-wide process, encouraging users to give their PAN Card/Driving License or other valid identity proofs.
Alternate KYC methods using Aadhaar can be also done, wherein the companies are not accessing the Aadhaar database, and using offline verification methods.
Or rather live video based KYC is also in talks.
But nothing concrete has happened in this regard, and mobile wallet companies are confused.
The executive said, “There is no eKYC, the RBI has not told us anything clearly about the alternative KYC mechanisms that they plan to approve. The deadline is just a few weeks away and we cannot adhere to (it) with this rate of progress,”
Paytm Can Survive
Paytm, the biggest mobile wallet in India can survive this turnmoil.
They have placed field agents, who are equipped with biometric dongles and other gadgets to complete KYC process via offline route for users, and as per reports, 70% of all Paytm users have completed their KYC.
But other wallets such as PhonePe, Freecharge, MobiKwik and others are still waiting for confirmation from the Govt. regarding alternative KYC methods.
Another executive said, “We are waiting till January 8, that is the last day of the winter session of Parliament; let us see what happens to the Aadhaar Bill. We will reach out to RBI and ask for the next course of action.”
We will keep you updated, as more details come in.