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 doubledigit 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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