KYC Standards for Digital Payments
To improve digital transactions security, the Reserve Bank of India has made it obligatory for all digital wallets to follow KYC regulations in India. In the past, prepaid payment tools (PUPs), such as digital wallets, did not require any KYC documents to allow the user to register and complete transactions. However, the RBI has now said that all users must submit their KYC details to continue using their digital wallets. Here's how the introduction of KYC standards in digital wallets will impact the digitization of the economy.
Details Required by Users
Initially, digital wallets required users to provide only minimal KYC details. For most wallets, users had to enter their phone number and verify their details through an OTP sent to that number. Once the OTP was confirmed, they could trade freely through their digital wallets. Now, digital users will have to add their PAN and Aadhar card credentials to carry on with their digital wallets, which is almost the same process banks follow to ensure secure payments.
Short-Term Impact of KYC Standards on Digital Wallets
Most of the users who might encounter difficulties due to the introduction of the KYC rules could be migrant workers. Workers quickly adopted digital wallets because they did not need KYC details as most of them did not have the required KYC documents. However, with the introduction of KYC norms, migrant labourers might not find any incentive to use digital wallets.
Will The Dynamics of Digitization Be Affected?
The demonetization move by the government has raised a considerable volume of transactions through a digital wallet. After demonetization wiped out almost 86% of the currency from the Indian market, many people switched to digital wallets instead. Digitization of the economy also benefits the government to have had a positive impact.
Many wallet providers offer special incentives in promotional strategies, including cashback offers or commission schemes on making transactions online to encourage more users to submit KYC information.
The introduction of KYC standards in digital wallets will bring transparency and security to digital payments to a great extent. Zambo, an online payment portal, offers numerous services, including online recharge, bill payment, and fund transfer facilities in just a few clicks. Visit www.Zambo.co.in to enjoy hassle-free transactions.