The Reserve Bank of India (RBI) earlier this month pushed for a full KYC (know-your-customer) requirement for wallets. It also directed financial companies to make KYC-compliant prepaid payment instruments (PPIs) such as mobile wallets inter-operable within the next six months. The new guideline is likely to impact the mobile wallets that will have to comply with the enhanced rules while still effectively managing costs.
In an email interaction with Moneycontrol, Renu Satti, the managing director and chief executive officer of Paytm Payments Bank tells how these guidelines will benefit serious players like Paytm that has over 250 million users. Edited Excerpts:
Even as many e-wallet firms are worried about the recent RBI guidelines for PPIs (pre-paid instruments), what makes Paytm support it?
This (the guidelines) leaves an edge for serious players to be a part of the financial eco-system. It shows that the RBI recognises pre-paid instruments as a long-term business that is scalable. Paytm wallet is being complemented with Paytm Payments Bank wherein we will be able to offer a full set of financial services including wealth management, lending in partnerships and payments along with deposits offering to our KYC user-base. Additionally, inter-operability will bring new customers to our platform. Also, now there is an unlimited amount of money that can move between bank and wallet.
What will be the key benefits of this move? A single KYC done by us will now be valid for wallet, bank and other financial services. This will give us a significant edge over standalone wallets. Money kept in a Paytm Payments Bank account will allow customers to use the wallet, earn interest on their deposits and use their debit cards anywhere anytime. In the coming months, we will facilitate access to a full set of financial services including wealth management, lending in partnerships and payments along with deposits. This will make their savings more rewarding. Our customers will also be able to transfer an unlimited amount of money from their Paytm Wallet to Paytm Payments Bank account.
Some industry watchers are of the view that since complete KYC will be required, many users may find it cumbersome and shift to regular banks.
Paytm has pioneered digital payments in India and enabled hundreds of millions of customers to experience convenient mobile payments for the first time. We have become a part of the daily life of the Indian consumer, and our assortment of use-cases along with our widespread adoption will ensure customers find it useful to continue using their Paytm Wallets and open their bank accounts with us.
What is the current cost of conducting KYC of an individual user? Don't you think, with this move the overall cost of Paytm for conducting KYC will grow exponentially higher? How much do you plan to invest in KYC exercise now?
We will be investing USD 500 million into KYC operations in the next three years to build the most dominant KYC compliant wallet and payments bank in the country. Our target is to have 500 Million KYC Wallets customers in next 3 years. We are expanding our KYC network across the country to enable all non-KYC customers to become full KYC customers and continue to avail all services including P2P.
The guideline has also asked to ensure that all the e-wallets are inter-operable in the next six months. Paytm has always been wary of this issue in the past. What are your thoughts on this now? Won't it offer predatory benefits to your rivals at the cost of customers owned by Paytm?
Whether its online or offline, at small stores or organised retail outlets Paytm is accepted and used by a large number of our fellow Indians from big cities or from small towns. With interoperability, customers who have their money stuck in other wallets will now be able to instantly transfer money into our system.
Do you also foresee consolidation in the sector, following this move?
It is clear that we will only see serious players committing themselves to build inclusive PPIs for the country that will further expand the digital payment adoption in our country.
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