After Paytm, Amazon starts physical KYC verification
BENGALURU: Deep-pocketed financial technology players are setting up physical infrastructure to provide know-your-customer (KYC) services for users, following the Supreme Court verdict restricting Aadhaar usage by private entities. Paytm has done it: It put a number of executives on-ground to nudge users to complete their KYC process after the verdict. Now, Amazon has started rolling out doorstep KYC services for its e-wallet users.
Verifying user credentials physically is costly, but after the SC verdict, these companies have few options left to safeguard their existing user-base and add new ones. With Aadhaar, it was a simple matter of swiping a finger on a fingerprint reader. Physical verification involves submitting physical documents and having people verifying the authenticity of the documents. The Aadhaar option costs a fraction of physical verification.Read more ↓
In 2018, Amazon had scaled up its payments business under Amazon Pay significantly, including in it a large number of merchants who were outside Amazon’s commerce ecosystem. Those like Swiggy and BookMyShow are also part of it. The company has spent significant capital in discounting and cashbacks to push Amazon Pay.
The RBI has mandated that e-wallets, or prepaid payment instruments (PPIs) as they are formally known, collect all verification related information of users by February. This has put additional pressure on these players, and explains Amazon’s sudden move.
Most of the smaller e-wallet players are said to be struggling to convert their existing users to KYC-compliant ones. Some like MobiKwik have diversified into a financial services platform instead of being just an e-wallet provider. “There is not enough incentive or convenience for users to go through the KYC process. While e-KYC helped, now it looks extremely difficult to collect complete KYC data of users, with the RBI deadline ending in February,” an industry executive said.
Those like Flipkart’s PhonePe who chose the UPI option do not have this problem. In UPI, one is sending money from one bank account to another directly. Those accounts’ KYCs are done by the respective banks.