After ban on Aadhaar-based eKYC, mobile wallet transactions show sequential decline
Transactions using mobile wallets declined month-on-month for November 2018, both in value and volume, following a September judgment by the Supreme Court barring the use of Aadhaar for e-KYC by private entities. Aadhaar-based e-KYC is one way to onboard new users.
After a ban on high-value currency notes in late 2016 forced people to pay digitally, mobile wallets such as Paytm became popular in India. But now, a Supreme Court order appears to have affected them.
The number of mobile wallet transactions stood at 347.32 million for November, down 5.7% from 368.45 million transactions for October, shows data from the Reserve Bank of India (RBI).
The value of transactions on mobile wallets stood at Rs 16,108 crore for November, down 14% from Rs 18,786 crore for October, according to data from RBI.
The number of transactions using pre-paid payment instruments (PPIs), including mobile wallets, also dipped for the month of November at 394 million, from 420 million for October. The value of transactions also declined to Rs 18,519 crore for November, from Rs 22,128 crore for October.
In the wake of the apex court order, the Telecom Regulatory Authority of India had asked telcos to suspend Aadhaar-based eKYC for issuing SIM cards by November 5, while the Unique Identification Authority of India (UIDAI) had written to multiple payments companies to provide confirmation of closure of Aadhaar-based eKYC in October, according to media reports.
The Supreme Court’s September order had resulted in businesses moving to paper-based KYC. Some companies were also exploring Aadhaar QR-code-based verification as well as image recognition tools for KYC. Fin-tech companies, digital lenders and others saw a slowdown in business as they looked for alternatives to Aadhaar based e-KYC. Cellular Operators Association of India (COAI) had previously suggested that Aadhaar QR code verification might be used in lieu of OTP (one-time password)-based e-KYC, which requires the holder to be physically present at the verification point.
Also, an RBI directive in October 2017 to mobile wallets requires them to complete KYC procedure for all customers by February 2019.
Following the Supreme Court order banning mandatory use of Aadhaar ID by private firms, the central government in the New Year has introduced a Bill in the Lok Sabha aimed at voluntary use of biometric Aadhaar ID for opening a bank account and getting a mobile phone connection.