How a recent RBI proposal on KYC has got payment aggregators on the backfoot
KYC process with a bank, the CEO added. “For small sellers, the dual KYC can be expensive and will increase the cost so much that most players will stop serving small online merchants. These include people selling on Instagram and Facebook, where the value and volume of transactions are small," said the CEO.
A spokesperson for Razorpay declined to comment. Cashfree Payments and PayU did not respond to emailed queries. A separate email sent to RBI remained unanswered.
Other industry experts say RBI’s proposals are a mixed bag, both clarifying prevailing ambiguities and raising the bar on things like KYC. According to Vishwas Patel, joint managing director of fintech Infibeam Avenues Ltd and chairman of the Payments Council of India, RBI’s draft brings uniformity across all payment aggregators, online and offline. “The KYC norms are now clearly defined but some of our members are finding the KYC of the smaller merchants stringent and not cost-effective, hence PCI will relay some comments to RBI on the draft notification this week," said Patel.
The founder of another fintech company said that onboarding costs could go up from ₹200 per merchant to ₹500 if these new guidelines are implemented. He said the idea behind the draft circular is more about ‘know your business’—to check if a business is doing what it says it does on paper—than KYC. “Someone can go and verify that the business exists but that increases the cost.
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