Mobile wallets will become strong players in the financial ecosystem as the RBI guidelines on prepaid instruments will allow more features like unlimited transfer of funds between a bank account and a wallet, a top official of Paytm Payments Bank said.
Paytm Payments Bank MD-CEO Renu Satti said the RBI guidelines released this month will enable mobile wallets to gain access to more functionalities like unlimited transfer of funds between a bank account and a wallet and higher limit of up to Rs. 1 lakh for money transfer to beneficiary accounts.
She added that as part of Paytm Payments Bank, customers get the convenience of wallets and can earn interest on their deposits by transferring money from the wallet to their payments bank account.
“This will further strengthen the value proposition of mobile wallets and make them stronger players in the financial ecosystem,” Satti said.
Paytm has over 270 million registered wallet users. However, the mandate to undertake KYC of customers could be a challenge as mobile wallets companies will have to make additional investments in the diligence process.
The KYC (Know Your Customer) process allows banks and other institutions to obtain and verify information about customers’ identity and address.
As per the new norms, mobile wallets that were conforming to a minimum KYC format (like verification of mobile number) will have to get full KYC of customers done within 12 months of setting up the wallet.
Paytm has already said it plans to invest $500 million towards the KYC exercise over the next three years.
Satti said while the process may seem time-consuming, it will also help prevent identity theft, fraud and money laundering and ensure customers’ money is safer than ever before.
“The new RBI guidelines would bring greater confluence and power to m-wallets. It will also ensure money transfers are simpler and financial systems are safer,” she added.
Paytm has introduced a ‘Nearby KYC Points’ section in its app that directs users to nearby partner shops and locations where customers can get Aadhaar biometric KYC done for their Paytm wallets.
Paytm Payments Bank started its operations earlier this year. Its Chairman Vijay Shekhar Sharma owns majority stake in the company, while the remaining share is owned by One97 Communications.
Disclosure: Paytm’s parent company One97 is an investor in NDTV’s Gadgets 360.