Wallets on the wane as Unified Payments Interface and regulations take over
It’s been
termed as a David versus Goliath fight ever since it started. With
the entry of prepaid wallets in the payments ecosystem, the Reserve
Bank of India (RBI) ushered in a new era where small transactions
were no longer dependent on heavy paperwork or two-factor
authentication. Then came demonetisation and Indian payments wallets
turned billion-dollar entities riding on the wave of digital
transactions. But, all that seems to have come to a halt.
On October 2017,
the central bank issued a master circular directing prepaid
instruments issuers (PPIs) to make sure their customers comply with
full know-your-customer (KYC) norms by February 2018. But wallets
seem to be floundering to get even a fraction of their users to do
their KYCs. While giants such as Paytm have tried to offer
incentives, the industry as a whole hasn’t managed to reach a
double-digit percentage of KYC-compliant users even in the second
week of March, insiders say.
“The figure of
KYC-compliant wallets rests at around 8-9 per cent by all estimates.
Even the RBI was told about this in a representation in February but
there’s no response from the central bank,” said a payments
industry professional who didn’t wish to be named on account of
being a part of the deliberations. As a result of the KYC norms,
people cannot load more than Rs 10,000 a month in their wallets and
are barred from transferring the amount to a bank account or sending
money to others.
“The challenge
is that there’s a temporary glitch in digital payments in the
country,” said Navin Surya, chairman, Payments Council of India.
Surya said
digital payments grew about 30 per cent and wallets 100 per cent last
year and this was sustainable only if norms supported non-banking
entities such as PPIs.
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