The Reserve Bank of India should consider offering licences in the digital payments space ‘on-tap’, rather than giving out only through a specific window, asked the digital payments industry in a presentation made by top industry executives in front of the newly formed Committee on Deepening of Digital Payments.
In a closed door meeting with the payment industry body, Payments Council of India, the five member committee which is headed by former Unique Identification Authority chairman, Nandan Nilekani listened to the demands of the digital payments industry and how they felt digitization of payments could be extended beyond the current level of 10% of total transactions in India. On behalf of the industry Naveen Surya, chairman emeritus, PCI, Vishwas Patel, chairman of PCI, Loney Antony, co-chair of PCI and PCI Executive Director Gaurav Chopra met the committee.
Speaking with ET, Surya said that licences across Bharat Bill Payments, Payment Banks and others could be made on-tap and offered in a tiered manner.
“An entity which enters as a prepaid wallet issuer can graduate slowly to different stages of licences like BBPS, Payment Bank etc, depending on scale and seriousness of the business,” Surya said. “Further if it fails to maintain such standards required of the level, it can be stripped down further through penal action.”
While requesting access to Aadhaar database for electronic KYC, the industry said that the RBI also should speed up the process for a centralized KYC mechanism very much like what markets regulator SEBI allows for mutual funds. This could help payment entities have a reduced cost structure and allow them to onboard customers seamlessly.
“There is an urgent need for setting up of a centralized KYC bureau to avoid duplication of cost across industry participants,” he said.
Also there should be some incentives for companies who are bearing the cost of KYC, otherwise it will never work, he felt.
In order to compete with cash transactions which can be done without Pan details upto Rs 50,000, the payment industry wants to replicate in the digital payments space as well. The regulator could look into allowing wallet companies to allow payments upto Rs 50,000 with minimum KYC which the industry feels will help fight a lot of small value cash transactions. Pointing out that credit cards can help digitise large scale small value merchant paymentspayments, if non banking finance entities are allowed to issue these instruments the industry expects that there could be a 10 times jump in the number of credit cards in the system.
“The regulator should also allow this for merchant onboarding up to a transaction limit where they can be brought into the digital fold with minimum KYC as well,” Surya added.
The body has also requested for removal of the mandatory full KYC requirements of mobile wallets, reinstatement of maximum wallet balance to Rs 20,000, facilitating benefit payments through wallets and allowing cash out through PPIs for beneficiary remittances.
While the non banking digital payments industry has grown rapidly over the last few years, many regulatory challenges have made life difficult for these entities, say industry insiders. Starting from mandatory full KYC to reduction of daily transaction limit by half, competition from global players who are using UPI for payments have all cumulatively pushed most of these entities to the back seats. With the RBI’s new committee on payments the industry is hoping that the regulator will hear their concerns and devise ways to minimize regulatory scrutiny on them and allow them to flourish.
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