With the Supreme Court arresting down Section 57 of the Aadhaar Act in October, thereby nullifying the biometric e-KYC model used by telecom companies and banks for customer confirmation and onboarding, stakeholders have been forcefully looking for a dependable substitute.
However, in the light of the above, the February-end limit set by the Reserve Bank of India to complete confirmation of all clientele may intimidate the country's mobile wallet exchange.
"More than 95 percent of the movable wallets in the country could stop being operational by March," a senior managerial with a New Delhi-based payments company. Prepaid payment instruments (PPIs) or mobile wallets were mandated by the banking controller in October 2017 to capture all in the sequence required under the know-your-customer (KYC) guidelines. To comply with this instruction, companies such as PhonePe, Amazon Pay and Paytm instantly began asking customers for recognition documents. The KYC obligation is also a key cog in the RBI's push for interoperability.
However, so far, the company in the business have been able to confirm just a portion of their total user base, and are yet to complete biometric or physical corroboration of the majority of users, industry insiders claim. Even Paytm, India's largest digital financial services provider is yet to convert 30 per cent of its user base into full KYC ones.
But other, smaller, payment companies have struggled to meet the directive since the older paper-based customer verification mechanism was not only more unwieldy but also more luxurious than biometric KYC. Besides, given the lack of any approved alternative to the suitable eKYC route, the looming RBI deadline reportedly cannot be met at the current rate of progress.
While the Unique Identification Authority of India (UIDAI) has been pushing the use of 'offline Aadhaar' that relies on QR codes, the buzz is that the RBI is keener on rolling out a digital verification method. But though alternative KYC mechanism like using video-based verification or XML-based KYC has been discussed, nothing has yet been formally accepted.
"We are waiting till January 8, which is the last day of the winter session of Parliament. Let us see what happens to the Aadhaar Bill," another payment industry managerial told the daily. "We will reach out to RBI and ask for the next course of action." These companies are hoping that the Parliament will approve awaiting legislation allowing voluntary use of the Aadhaar number by consumers for online as well as offline verification in order to speed things up.
However, many believe that the only separate wallets will be directly affected by the current impasse. Industry insiders point out that a large chunk of the wallets that were used for payment has already moved to the business reporter channels because of regulatory restrictions. Indeed, most of the PPI license holders such as MobiKwik, PhonePe and Amazon Pay are either focusing on Unified Payments Interface business or have diverged into other fintech activities.
