Mobile wallets search for new ways to ease KYC pain
Bengaluru: Mobile wallet firms are trying to put in place customer identification processes to adhere to the August 31 deadline when the full Know Your Customer (KYC) mandate kicks in.
This is the last date that the Reserve Bank of India has set to capture the complete details of wallet customers.
The problem is, as of now, the mobile wallet companies cannot avoid the physical leg of document collection, a major point of concern for the industry, and are hoping video KYC guidelines might ease the pain.
“Many of the wallet companies are trying to go for an offline journey after collection of basic physical documents like address and ID proof in a digital format,” said Wriju Ray, cofounder of the Mumbai-based digital KYC solutions startup IDfy. “If the video KYC guidelines come out, they will be able to remove the physical leg completely.”
A top payments company executive told ET that the regulator had already taken inputs from the industry regarding video KYC and is understood to have worked on it, but there is no clarity yet on the when the guidelines would be released.
RBI did not respond to an email seeking comment till press time.
“A few payment players had partnered with retailers or other companies for a ‘feet on street’, but that is a very expensive proposition and is not viable for business,” said the executive quoted above. Some of the major ones are moving on to a Unified Payments Interface-based system to bypass the mandatory KYC requirements, which are meant specifically for wallet companies.
Paytm, the country’s largest digital payments company, has also spoken against the mandatory KYC rules for mobile wallets. The company has requested the central bank to allow minimum KYC wallets to remain operational.
“In a physical document collection process, there is enough scope of human errors and can also lead to data leaks,” said Deepak Abott, senior vice president, Paytm, during a previous interaction with ET. “Not only does it cause delay in customer onboarding, it also increases cost of operations.”
Digital KYC allows for customer onboarding in a couple of minutes, but once the process goes physical it may prolong for a few days, say industry executives.
The cost of KYC for each customer can be as high as Rs 250, since an agent has to physically reach out to the customer. In cases of companies with large wallet bases, the cost shoots up enormously. Paytm has estimated a cost of Rs 2,500 crore for its 10 crore user base.
Even for video KYC, multiple concerns regarding internet connectivity and customer awareness remain. The expectation, however, is that more than 50% of the identification work would be accomplished through this route, reducing cost of operations.
“Video KYC will take some time to stabilise since we need a robust, scalable and auditable system,” said Deepak Sharma, head of technology at Kotak Mahindra Bank. “Now, with the propagation of mobile data across the country, connectivity should not be a problem, but we need stable mobile data to allow fast buffering of videos.”..Read More>>