Even as you might be watching television channels repeating ad nauseum the advertisements for PhonePe and Amazon Pay, many of these digital wallets may not even exist beyond February 28, 2019. This is because the banking regulator RBI has set this date as the deadline for them to conclude the KYC verification of millions of their customers failing which they cannot operate their digital wallets. Industry observers say only a small part of the customer base has been covered for the KYC by these companies so far. Paytm may be the only one to have done about 70%, but the RBI directive is very clear that it should be 100% or nothing.
The confusion has been created following the order of the Supreme Court on the Aadhaar case, setting aside the earlier need for compulsory submission of proof of identity and therefore verification. But with physical verification now being insisted, these digital wallet companies do not have the kind of infrastructure to undertake such a mammoth exercise. The cost of hiring external agencies would be too high as well.
The companies are trying to throw the ball into the RBIâ€™s court saying the regulator failed to provide an alternate method for verifying customers. A couple of suggestions were offered it appears, but none approved so far by the RBI. These included a video-based or an XML-based KYC verification.
The only alternate hope the mobile wallet companies are hoping for in the interim, is a legislation awaiting the approval of Parliament that would allow the Aadhaar card to be used for KYC, provided the customers voluntarily agree to submit the details. It is possible the RBI is also waiting for a partial solution from the Aadhaar Bill to be passed by Parliament. But the session itself comes to an end on Tuesday and will convene again for the budget session in February.
Some of the mobile wallets have moved away from the digital wallet business, a report suggests.
Physical verification of millions of customers is definitely going to be a challenge. One may have to wait for a few more days for clarity to emerge in the matter.