New Delhi, November 02, 2017: Total mobile wallet transactions in India are on track to reach INR800bn in 2017, a growth of 113% on the previous year, according to GlobalData, a leading data and analytics company. The company estimates that the market will continue to grow at a brisk pace to surpass the INR1tn mark in 2018. While the Indian government is heavily promoting the use of electronic payments, it has also introduced a slew of regulatory guidelines for mobile wallet providers in order to safeguard consumer interests, as well as curb money laundering activities.
Ravi Sharma, Senior Analyst at GlobalData’s Payments practice commented, “Complying with the new guidelines for the Indian wallet market, brought in by the Reserve Bank of India (RBI) in October this year, could be a challenging task for small players operating in the industry.”
The new guidelines included stricter ‘know-your-customer’ (KYC) norms, higher net-worth requirements, interoperability among mobile wallets together with a requirement that all existing mobile wallet users must be KYC-verified by the end of 2017.
The central bank also raised the bar for the net-worth requirement for companies seeking a prepaid payment instrument (PPI) license. This has been raised from the existing INR10m to INR50m, and will increase further to INR150m by March 31, 2020 which will become the new minimum threshold thereafter.
Sharma continued, “Ensuring KYC compliance is bound to increase cost incurred in the acquisition of new customers as well as the verification of existing users. While it may not affect bigger players such as Paytm as they are already working with their customers to update KYC, the additional compliance costs are likely to impact smaller firms.”
Small players with a limited funding are likely to either exit the market or be acquired by larger companies, resulting in the further consolidation of the nascent Indian digital wallet marketplace.
The new guidelines also form part of the government’s broader anti-money laundering regulatory programme aimed at curtailing any laundering or suspicious transactions carried out through these electronic payment methods.
In addition to KYC norms, the RBI also mandated wallet providers to track and maintain a log of all the transactions undertaken using these wallets for at least ten years, and report any suspicious transactions to the Financial Intelligence Unit (FIU).
The RBI’s decision to allow interoperability in the mobile wallet industry means that users using wallets will be able to transfer funds seamlessly between wallets of different companies and banks, via the Unified Payments Interface (UPI). Mobile wallet providers are required to make all KYC-compliant wallets interoperable amongst themselves within the next six months.
Sharma added, “This new functionality can facilitate collaborative innovation, create a level playing field for mobile wallet providers, and attract more customers to opt for wallets.”
Corporate Comm India(CCI Newswire)
