Many e-wallet users would have got reminders to complete their KYC (Know Your Customer) process by submitting a Permanent Account Number (PAN) or Aadhaar number, to continue using all the features of their e-wallet. Initially, the Reserve Bank of India (RBI) had set a deadline of 31 December 2017 for doing this, which was extended to 28 February 2018. This is in accordance with RBI’s guidelines for prepaid payment instruments (PPIs), which also include e-wallets. You can read the guidelines here and how it could change your e-wallet use here.
The proposed guidelines also aim at interoperability of e-wallets, so that transactions can take place between different e-wallets. To gradually move towards this goal, RBI has asked e-wallets to make consumers KYC compliant.
After the demonetization of high-value currency notes in November 2016, e-wallets saw a sudden jump in users. From neighbourhood grocery stores to roadside tea stalls, small businesses started accepting digital micro-payments through e-wallets. It was easy and simple to use. You just install and register an e-wallet app, verify your phone number with a one time password (OTP) and you were good to go. There was no need to share any documents.
As per the latest RBI guidelines, e-wallet issuers can have two types of accounts.
The first has a transaction limit of Rs10,000 per month. It can be opened with OTP verification of a mobile number, combined with a valid document like PAN or driving license. With this account, one can shop online and do things like pay for a cab ride; but cannot transfer money to another e-wallet account, even if it is with the same e-wallet provider. This means that when interoperability of e-wallets is rolled out, these users will not be able to benefit from it. Moreover, they can use this account only for 1 year, after which a complete KYC will have to be done. However, users of these accounts will have a one-time opportunity to transfer their balance to a bank account.
The second type of e-wallet account has a transaction limit of Rs1 lakh per month. This amount can be used not just for e-commerce, but also for transferring money to a bank account or even to another e-wallet accounts—with other operators, once interoperability starts. These accounts will need a complete KYC, which means validating the identity as well as address. This can be done online using Aadhaar or offline through other KYC documents.
For those who do not wish to complete the KYC process for their e-wallets, the money in their e-wallet will not be lost. You can continue to use that amount for your online transactions, till the amount is exhausted.
You will also have the one-time opportunity to transfer the amount back to your bank account. If you want to top-up your account or make remittance transactions to a bank account or another e-wallet account, you will have to complete the KYC process.