Skip to main content

RBI’s KYC Norms Burn a Hole in Mobile Wallet

By
RBI’s KYC Norms Burn a Hole in Mobile Wallet
No of transactions via mobile wallets fell 13% to 269 m in March from 310 m in February
India’s mobile wallet industry saw a sharp fall in usage in March as new Reserve Bank of India regulations kicked in, although not as drastically as had been feared. The number of transactions through mobile wallets fell 13% to 268.79 million in March from 310.01 million in February, and the value of money settled through wallets dropped 23% to ?10,000 crore from ?13,100 crore, RBI data show.
With the country showing higher adoption of digital payments overall, the fall in transactions through mobile wallets is likely because of customers moving out of the wallet ecosystem after RBI made full Know-Your-Customer requirements mandatory from March.While the industry had expected an 80-90% fall in wallet usage after February 28, when the new rules became effective, the numbers do not show such a drastic fall.
“The only possible explanation could be that transactions have picked up in terms of usage of wallets for goods and services, because remittance payments through wallets have definitely fallen as per our systems,” said the chief executive of a mobile wallet company, speaking on condition of anonymity.In an earlier interaction with ET, Mobikwik CEO Bipin Preet Singh had said that nearly 40% of their total users had submitted some form of identification documents.
An Amazon spokesperson had said cash being loaded into Amazon wallets had fallen by 95%, which could affect the rapid digitization of payments through wallets in rural and semi-urban locations.The fall in the value of transactions, however, is higher, showing that mobile wallets remain a predominant mode of transaction for small-value bill payments and recharges.
Transactions via prepaid cards, which are predominantly used for gift cards, too, have dropped since that industry has also been affected by RBI’s revised guidelines. In March, the total number of transactions fell to 24.8 million from 35.3 million in February.Meanwhile, the use of debit cards for merchant payments and of IMPS (Immediate Payment Service) for instant bank-to-bank settlements has increased. Debit card swipes at point of sales jumped to 318 million in March from 282 million in February. IMPS transactions jumped 10% to 110.15 million.Transactions via the Unified Payments Interface (UPI) jumped to 190 million in March from 178 million in February.

A senior payments industry executive said customers may have stuck to a minimum level of activity on their mobile wallets, as allowed by RBI for those having clearing its minimum KYC requirements. The main challenge now, this person said, would be to convert these customers into full KYC customers within one year, as mandated by RBI.

The Economic Times, New Delhi, 14th May 2018

Comments

Post a Comment

Popular posts from this blog

RBI deputy governor cautions fintech platform lenders on privacy concerns during loan recovery

By
  India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said.   Fintech platforms' business models The central bank deputy governor highlighted that many fintech platforms' business models involve providing sm
Post a Comment
Read more

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the rep
Post a Comment
Read more

India can't rely on wealthy to drive growth: Ex-RBI Dy Guv Viral Acharya

By
  India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve, Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said on Monday.Acharya, who is the C V Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern), said after the Covid-19 pandemic, rural consumption and investments have weakened.We can’t be pumping our growth through the rich and expect that the economy as a whole will do better,” he said while speaking at an event organised by Elara Capital here.f there has to be a trickle-down, it should have actually happened by now,” Acharya said, adding that when the rich keep getting wealthier and wealthier, they have a savings problem.   “The bank account keeps getting bigger, hence they look for financial assets to invest in. India is closed, so our money can't go outside India that easily. So, it has to chase the limited financial assets in the country and
Post a Comment
Read more