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RBI’s KYC Norms Burn a Hole in Mobile Wallet

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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

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