Increasing prevalence of UPI (Unified Payment Interface) applications has seen a push for mobile wallets throughout the country. Fintech companies like PhonePe, Paytm and Amazon Pay have had to notify and upgrade the users to full KYC (Know Your Customer) compliance by the deadline of February 29.
However, they have now been given leeway for users that aren’t fully KYC compliant to still continue operating. By converting their minimum KYC accounts to ‘low KYC’ pre-paid instruments or PPI accounts they can still use the platform. This ‘low KYC’ exemption was introduced by the Reserve Bank of India.
This account will be allowing monthly transactions of Rs. 10,000 which comes as a relief to 200 million non-complaint KYC mobile wallet users. The Supreme court had ruled out using Aadhar as an authentication means for KYC IN 2018.
These digital wallet providers had appealed to the government and central bank to ease KYC guidelines as they struggled with the customer database. Physical KYC was very time consuming and the digital payment companies also spent over Rs. 2000 crores for KYC compliance. To reduce costs and get customers KYC complied, they introduced digital KYC and video KYC.
While digital payments companies have increased and transactions have been more, the wallet share has reduced in the process.
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