E-wallets in a matter of just 2-3 years have made their presence so prominent and even surpassed the conventional banking route in case of remittances but given the current landscape, wherein the RBI has made a call for full-KYC compliance by customers, the trend can likely recede back to cash and banking transactions.
Before discussing about the latest RBI norm for a full-KYC to be followed for e-wallets, let us discuss what is an e-wallet and its different types?
What are E-wallets?
E-wallet in general is an electronic platform that enables commercial transactions and can be considered similar to debit cards which have pre-loaded cash for facilitating the transaction.
The digital India drive of the Narendra Modi govt has been given a boost with the manifestation of these e-wallets.
These wallets have been made the part of Prepaid Instruments of India.
There are different e-wallet types depending on the features and benefits.
1. Open wallets- These allow purchase of goods and services at point of sale terminals and also feature an option to withdraw money from ATM etc.
2. Semi-closed wallets- These wallets have tie-up with some merchant facilities and enable purchase at their outlets through the use of same wallets. However, these do not allow cash withdrawal.
3. Closed: They are more specific as transactions are allowed from a particular service provider.
RBI’s master guidelines on E-wallets
The central bank has asked all the PPIs to move all the instruments issued to full KYC by February 28 as else severe restrictions can be imposed.
Issues coming in full-KYC
One is the ease as in the current scenario, as customers just have to download any of the several available wallet apps but for KYC compliance there is a cost element from the side of the customers and also from the wallet provider as it then have to deploy verification machines that cost anyway over Rs. 3000
Also, as known only a very few number has been so far fully-KYC compliant, so many a wallet companies fear losing a significant chunk of their customer base and thus have requested the RBI to relax the guidelines in favour of these wallet companies.
So, the industry is asking for a may be one time password (OTP) aadhaar-backed verification and authentication to check any fraud.