Your Paytm, Mobikwik wallet may not work from today as KYC norms kick in

BENGALURU: If from today you are not able to load fresh funds into your mobile wallet, you can blame the Reserve Bank for it. In what could be a major impact on the digital payments industry, mobile wallets would be required to submit a full KYC for their users, without which the central bank would impose severe restrictions on its operations.

While the Payments Council of India, the industry body for the prepaid payments, made repeated appeals to the central bank to revoke the order and allow wallets till Rs 10,000 to operate without full KYC, the RBI said clearly that every payment instrument will have to abide by the KYC norms as they are also part of the extended banking ecosystem.

"It will impact the Rs 12,000-crore industry in a major way and consumers will be severely impacted over the next few months, but we expect that in the long run it will be good for the overall ecosystem since wallets will get access to quality customers," said Vinay Kalantri, founder of The Mobile Wallet.

According to RBI, consumers who do not submit government-approved documents and do a physical verification through biometric with their wallet providers, will not be able to load fresh funds into the wallet, transfer funds to other wallets and will only be able to use the underlying funds to buy goods or services. However, the funds in the wallet stay protected since it lies in an escrow account with banks and people will not lose their money.

The industry estimates suggest that almost 90% of the customers who are using various prepaid wallet services have not got their KYC done and will be debarred from using wallets from March 1.

"I am expecting a lot of consumers who had multiple wallet accounts to get their KYC done for only may be one of them depending on the usage, this could reduce the absolute number of wallet consumers for each company," said Bhavik Hathi, MD of consultancy group Alvarez and Marsal.