New Delhi: After clocking a record high in October, transactions through mobile wallets declined marginally in November, both in terms of value and volume.

According to Reserve Bank of India (RBI) data released on Monday, around 347.32 million transactions worth 16,108 crore took place in November, against 368.45 million transactions amounting to 18,786 crore in October. While the transaction volume is 5.7% lower month-on-month, the transaction value is 14% lower.

The decline comes in the backdrop of mobile wallet companies remaining shut out of Aadhaar-based identification to sign up new customers in the past 2-3 months.

The government is working to let private entities use Aadhaar for electronic know your customer (e-KYC) after the Supreme Court ruled in September that the unique number can only be used for welfare schemes and delivering state subsidies.

Last week, the Lok Sabha passed a bill to amend three laws to provide legal backing to the government’s decision to allow voluntary linkage of Aadhaar with mobile phone numbers and bank accounts. The bill seeks to amend the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016, the Indian Telegraph Act, 1885, and the Prevention of Money-laundering Act, 2002.

The draft Aadhaar amendment bill puts the onus on offline verification of Aadhaar number holders where the individual will be verified through QR codes without submission of biometric or demographic information to data servers of the Unique Identification Authority of India.

On 26 September, a five-member Constitution bench headed by former chief justice Dipak Misra said it was “unconstitutional" for private firms to seek Aadhaar-based authentication. Section 57 of the Aadhaar Act allowed the State, companies or a person to use the unique ID to establish the identity of an individual for any purpose. After the Supreme Court verdict, only the government can use Aadhaar for social welfare schemes.

Since then, some wallet companies moved to an offline identification mechanism. The cost of authentication went up from 15 per person under e-KYC, to 100-150 per person for a physical KYC.

Vishwas Patel, chairman of Payments Council of India, the industry body that represents digital payments companies, attributed the decline in mobile wallet transactions to the restricted on-boarding of customers.

“The new law, if it comes through, then only new on-boarding of customers will start happening," Patel said. “Another reason could be the growing popularity of Unified Payments Interface (UPI) which has impacted wallet transactions."

UPI is a payments system launched by the National Payments Corp. of India, the umbrella organization for all retail payments in India. It facilitates instant fund transfer between two bank accounts on a mobile platform, without requiring any details of the beneficiary’s bank account. UPI transactions crossed the 500 million-mark for the first time in November. In the last one year, the monthly UPI transaction volume has gone up by more than 2,000%, according to NPCI data.

Debit and credit card transactions also declined, both in terms of value and volume.

The volume of card transactions went down by around 4% to 1362.14 million in November from 1424.97 million in October. The value of these transactions also fell by 5% to 3.84 trillion in November from 4.04 trillion in the previous month.

Payments using real-time gross settlement (RTGS) decreased by around 7.6% to 10.97 million in November from 11.86 million in the preceding month.

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