Mobile wallet firm Paytm to recruit 10,000 more agents to complete KYC norms
Mobile wallet provider Paytm plans to double its team by adding 10,000 more agents — in advance of opening 100,000 branches across India — in an effort to complete the know-your-customer (KYC) norms, according to a report by The Economic Times.
The payments firm has set a goal of reaching 500 million full-KYC customers in three years.
Paytm said the Reserve Bank of India’s recent guidelines for prepaid payment instruments or mobile wallets will hinder standalone mobile wallets due its stringent KYC norms and additional regulatory requirements.
Earlier this year, Paytm transferred its mobile wallet or PPI licence to the payments bank in order to convert itself into a payments bank.
“We already have 10,000 people on the street doing KYC of our customers, now we are planning to hire 10,000 more within the next two months to expand our capacity to do physical KYC,” said Renu Satti, CEO of Paytm Payments Bank. “Also, we will open 1,00,000 banking outlets where customers can come in for biometric authentication and other basic banking facilities as well.”
Each Paytm banking outlet would be a combination of a mini branch with two or three employees and a network of business correspondents who will conduct basic banking activities and complete KYC formalities for customers, according to Satti.
Last week, RBI mandated full KYC even for mobile wallet customers as well as increased net-worth requirements for all firms applying for a PPI licence.
The industry has mostly commended RBI’s efforts to strengthen the digital wallet business through these guidelines, however, some companies said that these new requirements would jeopardize the separate payments bank proposition.
Satti pointed out that the new guidelines would apply a minimum 4 percent interest on the account balance of Paytm’s fully KYC-compliant customers.
This would put standalone wallets at a disadvantage as they are unable to charge any interest on wallet balances, despite incurring similar costs for meeting the KYC requirements.
“Standalone wallets are clearly at a disadvantage,” Satti said. “Money kept in your Paytm Payments Bank account along with its wealth management solutions can give returns of 4-6 percent, while the money in digital wallets cannot earn any interest.”
RBI’s new guidelines allow funds to be easily moved between the Paytm bank account and the Paytm wallet, which will make it less expensive for Paytm to load money into its customers’ wallets.
Standalone digital wallets, on the other hand, will have to be subjected to the merchant discount rate (MDR) while loading money into wallets, which is considerably higher, Satti said.