The Reserve Bank of India (RBI) has released new regulations for e-wallets, increasing the complexity of payments and cost of doing business. This has left digital wallet companies in a discontented state.
Most of the prominent players, including MobiKwik, Amazon Pay, and PayU are of the opinion that the new KYC norms will hike their cost of operations.
The MD of PayU observed that the new norms will be detrimental to the idea of using a wallet as an option for payments. The changes have made it similar to the process of opening a bank account.
The e-wallet industry is of the view that the need to complete full KYC can be detrimental to the business of captive wallets like PhonePe, Ola Money, and Amazon Pay as well, since the customer will be using the service only on a limited basis. This may lead to customers being reluctant to park money in these wallets.
Industry experts believe that the move from the central bank will streamline the business landscape of e-wallets where there is immense competition between big players and small niche companies. Some e-wallet players also think that the new RBI norms will help them catch up with market leaders.
RBI new guidelines for prepaid payment instruments
- The initial net worth requirement for e-wallet companies was previously Rs.2 crore. It has now been changed to Rs.5 crore.
- There is also a new restriction that the net worth should go up to Rs.15 crore within 3 years from the date of authorisation.
- Additionally, the Reserve Bank has asked firms to adhere to KYC compliance for the existing user base by the end of the year. Users failing to complete these KYC formalities will be allowed to keep only up to Rs.10,000 in the wallet. Further, the user will have to convert the ‘minimum KYC’ account into a ‘full KYC’ wallet by completing KYC requirements within 12 months, failing which there will not be any credit facility offered.