E-wallets KYC-deadline: No extension beyond 28-February. Will it impact you?
In a major setback for e-wallets, RBI has refused to extend the deadline for mandatory full-KYC (Know-Your-Customer) compliance by users beyond 28 February. The move puts Rs. 12,000cr, or 80%, of digital-wallet transactions at risk. There are 55 non-banking Prepaid Payment Instruments (PPIs) and 50 e-wallets promoted by banks. Popular PPIs include Paytm, FreeCharge, Mobikwik, PhonePe, etc. So, what happens to e-wallet balances now?
Customers will not lose money: RBI Deputy Governor
RBI Deputy Governor BP Kanungo said, "Sufficient time has already been given (to PPIs) to meet the prescribed guidelines." However, customers having balances in digital wallets or PPIs need not worry even if they don't comply with KYC norms. "In the event PPI issuers not obtaining the KYC-related inputs within the timeline from their customers, customers will not lose their money," Kanungo added.
How can you fulfill KYC requirements?
Kanungo said e-wallet users can continue to make transactions with current available balances in their mobile wallets, but they will have to comply with KYC norms before reloading them or further remitting money. Such users can fulfill KYC requirements by submitting documents like Aadhaar number, voter ID, PAN, passport, and driving license to digital wallet companies. Some may require physical biometric verification, too.
Reloading of wallets and remittances
"Reloading of the PPI and remittances can resume after completing the KYC requirement. They (customers) can continue to undertake transactions for purchase of goods and services as thereto to the extent of available balance in the PPI," Kanungo said.
KYC compliance required for inter-operability between PPIs, banks
Kanungo said RBI's guidelines are "designed to strengthen safety and security of transactions and customer protection." He added KYC requirements are "necessary to usher in inter-operability" between PPIs with bank accounts and cards. But, e-wallet companies feel if KYC is done using phone-numbers, it should be able to take care of security concerns as mobile-phones are already required to comply with KYC norms.
Mobile wallet companies fear losing 90% of customers
RBI earlier gave PPIs time until 31 Dec'17 to make their customers' accounts KYC-compliant; however, the deadline was later extended to February 28. However, the e-wallet players are finding the KYC-requirement challenging. If the RBI's guideline is implemented, they may lose businesses as 90% of their customers comply with minimum KYC (providing mobile number) and not full-KYC that's required by the central bank.
Customers going back to cash: E-wallet companies fear losing users
Following RBI's move, e-wallet players fear the country is going back to cash from cashless options. A mobile wallet company's executive said, "We have not even managed to finish 50% of the customers' KYC." The executive added, "There is no motivation for the customers to do the KYC, they'd rather prefer to go back to a convenient option of cash."
