Original: Inc42, September 5
Analysis: India is en route to become a country that transacts mostly online. The digitization process for payments has been quite successful keeping in mind the number of platforms that have emerged since the controversial demonetization move by the government. Alongside Paytm, which is the largest player in the market, there are other global players battling it out to make a mark in the market such as Google, Flipkart and so on.
The Reserve Bank of India (RBI) had introduced Know Your Customers (KYC) guidelines for the payments apps as a measure to strengthen safety and security of transactions and customer protection. Out of all the digital payments apps only Paytm has the KYC User Agency (KUA) license.
PhonePe, which is the payments arm of the e-commerce giant Flipkart, said that they did not receive any response from the Unique Identification Authority of India (UIDAI) regarding the KUA license. The payment companies were revoked of their e-KYC in April by the UIDAI. As a result, they have started using a passport, Voter ID, driving license, PAN card and even MNREGA job card to choose from for the KYC process.
The full KYC authentication and the complications that are tagged along makes the user experience really scarred and hence the transactions through the e-wallets have reduced significantly in the recent times. Vendors are unable to withdraw money from the wallet and that is a huge problem for the small businesses. However, the transactions through the UPI based platforms such as BHIM have increased due to its simplicity.