Through its latest set of guidelines for E-Wallets, Reserve Bank of India (RBI) has introduced strict know your customer (KYC) norms which has evoked mixed response from digital wallet companies.
RBI’s Latest KYC Guidelines for E-Wallets:
E-Wallet firms have been instructed to ensure KYC compliance of existing users by December 31, 2017.
- Users who do not have stipulated KYC in place, will be allowed to keep only up to Rs 10,000 in wallets post the deadline.
- No credit facility will be provided to such users, if KYC is not completed within next 12 months.
- RBI has directed all PPI issuers (both bank and non-bank entities) to make all KYC-compliant PPIs issued in the form of wallets interoperable amongst themselves through Unified Payments Interface (UPI) within next six months. Thus, the latest KYC-compliance norm is a pre-condition for interoperability of Prepaid Payment Instruments.
- RBI has also hiked initial net worth requirement for prepaid payment instruments (PPI) licence to Rs. 5 crore from Rs. 2 crore.
- In addition to this, the firms getting authorisation for licence should have net worth of Rs. 15 crore within three financial years of receiving authorisation.
Digital Wallet Companies’ Reaction to the new KYC Guidelines:
Experts believe that these KYC guidelines will alter the dynamics of the digital payments industry which currently has large adequately-funded companies as well as small niche players which focus on captive user base. There exists a high possibility of consolidation wherein smaller players will be acquired/merged into large players.
- While the large companies are capable of meeting this regulatory requirement, many players including Amazon Pay, MobiKwik and PayU have admitted that it will increase the cost of doing business.
- Notably, with E-wallets becoming inter-operable, having full KYC –Compliance and having balance limits similar to payments bank will pose a question over the very necessity to have payments banks as a separate entity.