Digital payment companies fear new rules may cripple industry
MUMBAI: The stringent regulations drawn up by the central bank last week to oversee digital payment companies have prompted the industry to join forces and seek changes in a few of the stipulations, according to senior industry executives.
The Payments Council of India, an industry grouping, has already written to the central bank seeking a hearing on issues they deem as “critical” to the nascent payments industry. “Some of the new norms could severely cripple the industry and make the wallet business unviable,” said one person cited above.
“We have already reached out to the Reserve Bank of India. We are expecting to meet senior officials in the central bank and raise our concerns regarding the stringent provisions in the prepaid instrument (PPI) licence guidelines,” he said.
Among the major points of concern, according to industry members, are the demand for a mandatory full KYC or know your-customer certification, phased introduction of interoperability and restriction of peer-to-peer fund transfer in semi-KYC wallets.
“We plan to aggressively push the RBI on mandatory conversion of all wallets into full-KYC ones as we believe that we cannot have all wallets under full KYC,” said the chief executive of one of the largest wallet companies.
‘Revised Guidelines Too Stringent’
The revised guidelines are more stringent than they need to be.” Another major hurdle for payment companies is prohibition of inter-wallet transactions, along with transfer of funds from bank account to wallet from semi-KYC accounts, which the companies believe will destroy the relevance of mobile wallets.
“The scope of fraud is more in moving money through debit or credit cards into wallets and then siphoning it off to other bank accounts. P2P fund movement is not risky that way. We had made multiple representations to the RBI on this,” said one of the industry executives who spoke to ET Although the industry was prepared for stricter guidelines, the scope of the regulations announced last week has dampened the outlook.
Digital wallets have largely been viewed as a preferred mode of fund transfer for small value and among people who cannot easily open a bank account. The domestic remittance business is based on mostly migrant workers using prepaid instruments to send money regularly back home. “The major problem they face is of an address proof as they keep travelling to different places in search of work.
For them, doing a full-KYC to open a digital wallet every time will be a major hindrance for smooth business,” said the founder of a Mumbai-based payments company.