The revised wallet guidelines from the Reserve Bank of India (RBI) are out. The guidelines brought much cheer from the wallet players for allowing interoperability. However, a cloud hung over most players due to the increased KYC norms. Here are some of the responses to the guidelines:
Ramki Gaddipati, co-founder, and CTO of Zeta
Gaddipati said that the cost of operating a wallet is going to be substantially higher. “There is going to be an increase in regulatory compliance and the compliance burden is going to raise substantially when it comes to KYC, operating the system, and what needs to be done when a customer needs to close their wallet. There is a substantial overhead that the guidelines introduce,” he said.
“I can understand that for the industry, KYC is going to be a big burden, also the immediate change from Rs 20,000 to Rs 10,000. This was something that most people weren’t expecting,” he added.
On interoperability, Gaddipati expects a consolidation in the number of players in the industry with the UPI being enabled for wallets.
“I think this is long overdue. I don’t see why 15 wallets need to go to the same merchant and ask them to add the details of those prepaid instruments. I think it’s just pointless and I’ve tried talking to several industry players as well. It had a basis back when it was relevant back then. In recent years, the digital push given by the government, this has been the biggest hurdle. Having eliminated that, I think it’s a beautiful thing,” he added.
“Today, for various reasons, a merchant might be required to accept Zeta or a merchant may be required to accept Paytm. And this is over and above the merchant accepting a Visa or a RuPay card. Merchants are dealing with a large number of payment providers and settlement providers. This is a step towards consolidation. We are still not seeing a one single mode emerging. The industry is fairly complex and the networks are fairly complex. I do not expect the merchant to get one MDR at least in the next couple of years,” Gaddipati opined.
However, he added that different players will have to focus on different parts for merchant acceptance. “If you look at wallets, you should have money and you should also transact that money with my merchant. In a bank’s case, a bank can bring in a merchant and the bank which holds the money will give you an instrument to pay to that merchant. So it’s a two party system in these cases. With the UPI it’s a three party system. There is a bank who has my money, and there’s a merchant who wants the money, and I have an app which is not given by my bank or merchant but I can use this app to make a payment,” he explained. He added that wallets could be playing one of the three roles in the system described above.
“Paytm could be playing all the three roles or it could be playing the role of giving the user a good payment interface or to the merchant. But I think given that these three roles can be played independently going forward there will be newer player coming in or exiting players strengthening their positions on one of the three aspects rather than trying to strengthen on all three aspects. Because all three aspects are very different and have their own challenges and getting merchants to accept digital payments is a very different thing from giving a beautiful interface for a sophisticated user. The push for UPI and the push for interoperability allows players to focus on these big independent, isolatable problems.”
Naveen Surya, chairman of Payments Council of India
In a message, Surya told MediaNama that normal KYC through traditional means is possible, however, he did add that Aadhaar eKYC is better for the entire industry. On the reduction of limits for wallets without complete KYC, he added that adding KYC would help the money transfer business. “Earlier money transfer with KYC was Rs 25,000 a month which is increased multifold to Rs 1 lakh per beneficiary on monthly basis,” he said.
On interoperability, he added that the guidelines will make wallets on par with debit and credit cards. “The guidelines are laying the foundation for PPIs to become interoperable with all existing payment instruments and in par of acceptance of debit/credit Cards in phases manner. This would ensure that PPIs contribution to digital payments fro the current share of less than 10% can move to 30-40% in next 5 years,” said.
Bhavik Vasa, Chief growth officer for ItzCash Ebix
Vasa questioned why the RBI was revising the wallet limit downwards for wallets with minimum KYC. “We would like to seek clarity with the regulator and understand better on reasons for a few downward revisions and limits, like minimum KYC PPI limit of Rs 10,000 and also Gift Cards which are non-cash out instruments, and Cash loading of PPI limited. These may limit our fight against physical cash in the economy, especially when we can buy gold to Rs 2 Lacs with cash in our country,” he said.
Vasa added that interoperability goes beyond wallet-to-wallet transfers or wallet-to-bank account transfers. “It is a larger piece in an entire digital payments eco-system which enables and empowers all the players – be it banks, network and non-banks to facilitate seamless operations across instruments.”
He cited that another example interoperability was the Bharat Bill Payments System where all players such as payments banks, network, non-banks etc. have found a role to play. “These are great learnings for us and the same model should be replicated in the entire ecosystem. This will ultimately lead to a seamless frictionless experience for the consumer leading to larger adoption,” he added.
Sriram Jagannathan, Vice President for Payments at Amazon India
Jagannathan also raised concerns about KYC.
“One of our concerns is that even low usage wallets are required to do a KYC beyond 12 months: this adds friction to customers. We urge the regulator to re-examine this in line with international guidelines and adopt a framework of proportional KYC,” he said. Amazon Pay also said that it saw a 36 times growth in top-ups in the recent Great Indian Festival displacing cash and increasing digital transactions.
He also added that the company was “encouraged” with the opening up of cross-border remittance and interoperability. “We will comply with these guidelines and thank the RBI for seeking industry feedback and largely accommodating them,” he added.