Many top companies in India including PhonePe, PayU India, Zerodha, Razorpay, have filed a petition with the CEO of the Unique Identification Authority of India (UIDAI) after the government run organization revoked access to agencies that provide e-KYC verification and authentication services for fintech companies.
The companies approached the statutory authority under the Aadhaar Act 2006 to curb their customer base from falling. The new RBI norms have brought a dip in e-wallet business across India.
“Aadhaar enables a consent-driven, secure, faster and simpler delivery mechanism for residents to avail various essential services from trusted providers. The requesting parties can use online authentication to validate these identities, thus bringing in the trust that is required in the transaction. This is significantly more privacy protecting and cost-effective than the use of paper photocopies that were common before. As a result, it has enabled these businesses to service customers that they did not earlier,” the petition read.
Companies started to verify KYC documents electronically to make the process easier for users. Usually, a physical paper KYC verification costs around ₹100 while the eKYC verification can be done with just ₹15.
The cost escalation in executing KYC is a big reason for these companies to band together and raise their concerns around the development. Physical KYC is not a viable option for most business, argued the companies.
A majority of the fintech startups have largely built their businesses on the back of e-KYC compared to large banks, NBFCs among others. UIDAI’s move had deeply impacted their business.