RBI Commences Low-KYC for FinTech Customer Retention

The Reserve Bank of India (RBI), on February 5, introduced ‘low-KYC’ to let non-compliant know-your-customer accounts continue paying via mobile wallets. Prior to this, the RBI had recommended payment companies to conform to ‘full-KYC’ by February 29, 2020. As a result, approximately over 200 million mobile wallets were under the risk of getting cancelled by the regulators, owing to the approaching deadline of upgrading the non-compliant accounts to ‘full KYC’ account. Apart from this, RBI has also recommended video-KYC as an alternative to establish customer identity.

Therefore, now, mobile wallet firms such as Paytm, PhonePe, Amazon Pay, etc. and their user-base running into millions would be able to continue their association per the permission from the RBI allowing wallet service providers to continue operating their millions of non-compliant KYC accounts without any transnational limits.

With this new alternative of the RBI, a mechanism will be offered to customers wherein they will be able to convert their ‘minimum KYC’ accounts to the RBI’s ‘low-KYC’ PPI (Prepaid Payment Instrument – a semi-closed retail payment instrument introduced by the RBI in December 2019, having a monthly rechargeable limit of Rs. 10,000 or of Rs. 1, 20,000 in a Financial Year, and which is issued based on the sourcing of essential minimum details from the customer –) accounts.

This comes as a sigh of relief for FinTech firms as they were finding it difficult to onboard fresh customers and retain them following the barring imposed by the Supreme Court on telecom companies and NBFCs concerning the usage by them of Aadhaar-based KYC in 2018. Now onwards, companies will seek customer consent prior to performing ‘low-KYC’ of their accounts. However, it should also be noted that while KYC formalities were already done before, these were rendered null and void following the earlier pronouncement of the restrictions of the Aadhaar KYC method by the Supreme Court.

Following this, in February (2019), the Union Cabinet had considered promulgating an ordinance to permit voluntary use of Aadhaar number as a proof of identity for bank account opening and also for obtaining a new mobile phone connection. While the payment firms had also sought from the regulator an alternative to eKYC for onboarding and verification, the Payments Council of India (PCI) also requested the regulator to postpone the conversion of minimum-KYC accounts to full-KYC accounts deadline till February 28, 2020, owing to Aadhaar restrictions pertaining to eKYC process.

Other proposed formats of KYC in the pipeline include live video customer verification and XML internet format. It has also been reported that Amazon Pay had considered doorstep KYC for its mobile wallet subscribers.

FASTag is LIVE! Buy, Activate, Recharge, & More Info

FASTag

Introduction: The Policy Brief

The National Payments Corporation of India (NPCI) and National Highways Authority of India (NHAI)-introduced National Electronic Toll Collection (NETC) mechanism, FASTag – having an embedded chip and antenna – is now live. Operational at 604 toll plazas across national and state highways (click here for the full list), w.e.f. 15 Dec. ’19 (although initially the roll-out of FASTag was scheduled for 1st Dec. ’19 – per the letter sent by the Ministry of Road Transport and Highways to the NHAI), FASTag enables automatic collection of toll charges. The government then decided to provide enough time for vehicle owners to switch to FASTags – hence the deferred extension.

Dubbed to be the leading disruptor on India’s national highways, FASTag was first envisioned in 2014. All cars, jeeps, vans, buses, trucks and, commercial and private off-road vehicles that pass the toll booths on national highways will now pay FASTag-enabled toll. The FASTag payments at national highways are incentivised with a cash-back scheme of 2.5% – for eligible customers – until March 31, 2020. FASTag is also poised to facilitate seamless traffic monitoring and fitting policy revisions.

Previously, only a single hybrid lane was to be allotted at every toll plaza having FASTag and other modes of payment – facilitating passage and monitoring of over-dimensional or over-sized vehicles. Depending on the traffic situation at high-traffic volume fee plazas, not over 25% ‘FASTag lane of fee plaza’ were planned to be temporarily converted to hybrid lanes – per the instructions given earlier by the ministry to the NHAI.

At this stage, it was to be ensured that the minimum number of the declared FASTag lanes be converted into hybrid lanes for the time being. Further, a minimum of 75% lanes of every fee plaza were to remain declared and operational as FASTag lanes so as to incentivise the vehicles carrying FASTag.

The One Nation One Tag – FASTag ensures interoperability via cashless electronic processes at toll booths. According to the Memorandum of Understandings (MoUs) that the states and the highways authority signed, the states’ are poised to receive 50% of the capital expenditure (capex) for the toll infrastructure construction.

Buying FASTag

Buying FASTag is possible by visiting any of the Point-of-Sale (PoS) locations at Toll Plazas or PoS outlets of the NETC Member Banks or their distribution agents or their Sales offices. Otherwise, FASTag can also be availed by applying online at the respective issuer bank’s website or by visiting this NHAI portal link. If you have bought FASTag from Amazon, you will need to download the MyFASTag App and link it to your bank account.

Activating FASTag

  1. Do-It-Yourself Activation: FASTags don’t have banks assigned in advance as they are (bank) neutral at the time of buying from a POS terminal or online platform. The online FASTag can be activated by yourself when you enter vehicle details in the ‘My FASTag’ mobile app. There also exists the flexibility to link the FASTag with any of your current bank accounts via the My FASTag Mobile app. The NHAI Prepaid wallet facility is also offered in My FASTag mobile app for you to load money and get your toll fee debited from the prepaid wallet as against getting it debited from your bank account directly.
  2. Activation by Certified Bank Branch: Alternatively, you can also buy FASTag at the closest certified bank branch and can then link the FASTag with your current bank account.

Document Submission for FASTag

A customer is required to submit the following documents along with the application form for FASTag:

  1. Signed FASTag application form, given by issuer bank that customers must fill and submit to the bank.
  2. Registration Certificate (RC) of the vehicle.
  3. Passport size photograph of the vehicle owner.
  4. KYC (Know Your Customer) documents as per the category of the vehicle owner.
  5. A valid driving license.
  6. Vehicle image (optional).

Recharging the FASTag

Recharging the FASTag account is possible in the denomination of Rs. 100. The maximum amount of recharge is decided depending on the type of vehicle and account link to FASTag. In case the FASTag has previously been linked with your bank account, loading money individually in a prepaid wallet will not be necessary. Although, maintaining enough balance in your FASTag-linked bank account to allow for toll payments is necessary. NHAI prepaid wallet can be recharged via different channels, viz. payment via cheque or via UPI or debit card or credit card or NEFT or Net Banking.

  1. Limited KYC FASTag account holders can’t have a balance of over Rs. 20,000 in their FASTag prepaid wallet. The monthly reload limit is Rs 20,000.
  2. In full KYC FASTag account holders aren’t permitted to have over Rs. 1 lakh in their FASTag prepaid wallet (no monthly reload cap exists).

Recharging a FASTag via the BHIM UPI app is also possible – although, buying FASTag via the BHIM UPI app isn’t possible.

Financial Inclusion: All you need to know

Financial inclusion is where people and organizations approach valuable and moderate money related items and services that address their requirements which are conveyed in a mindful and credible way. Financial inclusion is characterized by the accessibility and fairness of chances to get money-related services. The accessibility of monetary administrations that meet the particular needs of a user without any discrimination is a key goal of Financial Inclusion. Continue reading “Financial Inclusion: All you need to know”