Ola Money to shift to limited KYC wallet from April 1

Ola has also asked its customers to convert the Ola Money wallet from Full KYC to Small PPI or close thier existing wallet

Ola Money, the online wallet business of Bhavish Aggarwal-led Ola Financial Services, informed its customers that the firm would be transitioning to a ‘small prepaid instrument’ (PPI) wallet from the current ‘full know your customer (KYC) wallet’ starting April 1, 2024, a move that will reduce the time and cost of KYC process of each of its customers.

“We are writing to inform you about an important update in our policy regarding your Full KYC OlaMoney wallet…We are transitioning completely to Small PPI with a maximum wallet load limit of Rs 10,000/- per month, effective from 1st April 2024,” the firm wrote in an email to its customers on March 15.

PPIs are instruments that facilitate the purchase of goods and services, conduct of financial services, enable remittance facilities, etc., against the value stored therein. Small PPIs (or minimum-detail or limited KYC PPIs) are basically issued by banks and non-banks after obtaining minimum details of the PPI holder. The user will not have the option for fund transfer or cash withdrawal.

Ola has also asked its customers to convert the Ola Money wallet from Full KYC to Small PPI or close thier existing wallet.

"To smooth this transition, we advise you to utilize all the available balances in your wallet by 31st March 2024. You can utilize this Ola cab ride and on other 10,000 merchants or withdraw the complete amount if any and close the wallet,” The email said.

“KYC regulations and complaince have become more stringent now than ever. Moreover, OlaMoney customers might have never used the wallet for fund transfer it will mostly be for Ola’s ride-hailing services so it makes sense to have a small PPI,” an industry source told Moneycontrol on the condition of anonymity.

This comes at a time when the Reserve Bank of India (RBI) has been keeping a close watch on non-compliance with KYC norms by fintechs and banks. Last month, the central bank barred Paytm Payments Bank Ltd (PPBL) from accepting deposits, credit transactions, or top-ups in any customer accounts, wallets, NCMC, and FASTags.

In 2022, The Reserve Bank of India (RBI) put a fine of Rs 1.67 crore on Ola Financial Services Ltd for not complying with its prepaid payment instrument (PPI) and know-your-customer (KYC) guidelines.

Recent RBI audits on fintechs have also been centered around KYC compliance.

“The RBI audits on compliance and the KYC cost must have exceeded way beyond their budget and might impact their books as well,” added another source aware of the developments.

Ola Financial Services reported a revenue of Rs 85 crore in FY23, a reduction of 22 percent from Rs 110 crore in FY22. The financial services arm reported a loss of Rs 54 crore during the period.