KYC Deadline Expires, Paytm & Mobikwik To Lose 40% Of Users

Following the expiration of the deadline for the mandatory know your customer (KYC) registration ended yesterday, mobile wallet firms like Paytm are expected to lose nearly 40 per cent of their user base, . According to industry experts, mobile wallet firms, including Paytm, Amazon Pay, PhonePe and MobiKwik, fear losing a significant portion of their user base. It has already been observed that Amazon Pay has seen a 30 per cent drop in customers, with most members not updating their KYC details.

“Customers see KYC as a point of friction and need to be motivated for doing digital transactions. The industry is working towards being compliant with the RBI master directions for PPIs, but the customer adoption of KYC norms has not been very encouraging,” said Sunil Kulkarni, co-chairman of the PPI committee of the Payments Council of India (PCI).

Since KYC verifications have been made mandatory for mobile wallets, the customers are deterring from these payments applications, he added. The industry is providing cash backs to users to incentivize them to use digital means for transactions. “In the short term, this is needed to bring customers on board and convert cash behavior into digital in the mid-to-long term. In terms of a sustainable strategy to drive KYC, what will enable customers to do so is a smooth digital KYC experience,” said Sriram Jagannathan, co-chairman of the PPI committee. “Based on early results, most players have seen a big drop in customer base. We have seen a significant drop in new customer registrations and expect further drop offs in the coming days as we make OVD collection mandatory for cash loading at doorstep. Customers opt for cash since they cannot load money without furnishing additional details,” Kulkarni said.

It is learnt that companies such as Paytm have invested almost $500 million to get the KYC process done for its 280 million-plus customers, as per Business Standard.

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“The Reserve Bank of India’s (RBI) revised master circular directing wallet companies to make all PPIs issued by them full KYC compliant are cumbersome,” said Vinay Kalantri, founder and managing director of The Mobile Wallet. This move will make it more difficult for wallet providers further since only 45 per cent of customers have reportedly completed the full KYC compliance process so far. Hence, completing the full KYC norms will mean these wallet companies losing customers in a spree since users who are not fully KYC compliant tend to stop using the payments applications.