There have been two interesting stories coming out this month that show the increasing acceptance of digital payments in the retail payments sphere. One, mobile payment apps and wallets are preferred for online purchases of segments like movie tickets, utility bills, taxi rides and are posing a challenge for card payments (With Bollywood lost, Indian banks can’t stop mobile juggernaut, Mint, March 5, 2018) and two, data from RBI showed a faster growth for UPI payments than card payments at PoS terminals (UPI Payments Growing Faster Than Visa and MasterCard in India, Quint, March 28, 2018),
There has been some strong regulatory action on the KYC front however. Despite strong representations by industry, the RBI had refused to extend the KYC compliance deadline for PrePaid Payment Instruments (PPIs) beyond the stipulated date, 28 February 2018 (See Mobile wallet firms grapple to get users to comply with KYC norms, Mint, March 3, 2018). The RBI also issued new norms for payments banks to use third parties for KYC verification, and not rely on KYC done by telecom companies (Mint, February 21, 2018). While better KYC compliance enables smooth inter-operability and reduces risk of fraud, the RBI needs to ensure that its regulatory requirements do not kill innovative digital payments solutions for low income customers, especially in rural areas.
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