The country is moving forward to lead a cashless future and the Buy Now Pay Later (BNPL) market is contributing to the share of financial growth by adopting the method of PPI (Prepaid Payment instruments). This year the number of issued and active cards with credit line-filled PPI wallets is more than 10 million, and ₹3500 crores have already been processed The country is moving forward to lead a cashless future and the Buy Now Pay Later in the month of May.
Earlier in July when RBI circulated the regular for NBFCs (Non-banking financial companies) to stop providing cards with credit lines to their customers, many fintech companies fell in despair. New RBI guidelines banned nonbanks from loading PPIs (Prepaid payment instruments) that is, digital wallets and prepaid cards with credit lines. Now a buyer can only use the preloaded PPI.
According to a recent study, the Indian BNPL (Buy now pay later) market has increased by 21% this year. Even when the Indian credit period for zero-interest loans is set for 20-40 days, people are more interested in longer installment repayments at higher interests. This high dependency of the BNPL model on the late fee module hinders the path of profitability for the buyer, especially for Indians with small financial knowledge who fall under scams and fraudulent transactions.
Role of KYC (Know your customer)
KYC is a compulsory process to identify and verify a customer’s identity while opening an account. KYC guidelines prevent banks and other e-commerce companies from money laundering.
As the BNPL contributes to the growth of the Indian digital market, the Payment Council of India (PCI) with many fintech companies has implored the government and banking regulators to permit PPI with credit lines to a full KYC customer. In fact, the Internet and mobile association of India (IAMAI) stated that full KYC customers with a non-revolving credit line should be treated the same as bank customers.
Safeguard provided by financial institutions
New regulations have put many fintech companies under pressure even though their limits were already tight. To secure customers’ trust and create a safeguard for prepaid cards NBFCs must follow the full KYC guidelines and due diligence checks of customers through digital or physical means.
Minimum KYC is needed to operate a digital wallet that must consist of an individual’s name and a unique identification number from any of the identities. As per RBI, the minimum KYC is valid for 24 months.
Maximum KYC is required to enjoy the full benefits of the wallet for a longer period of time full KYC is required. According to RBI guidelines, a full KYC is done by physically verifying an individual’s unique documents and address proof by using Aadhaar verification or In-person verification.
For individuals without any permanent account number (PAN number) but are involved in transactions specified in Rule 114B of the income tax rules,1962, such as opening an account with the bank or any financial institution and purchasing credit or debit cards, RBI prepared a provision of Form 60. Such an individual requires a duly signed copy of Form 60 that is needed to be attached with other supporting documents.
How does BankIT help?
BankIT offers reloadable prepaid cards that provide safeguards from money laundering and data breaches.
BankIT has come up with “Aadhaar pay” which is used by businesses for receiving transactions digitally. The business is provided by a BankIT’s app that is connected to a biometric device that reads the customer’s Aadhaar number and biometric authentication linked to the bank account which then transfers money from the customer’s account directly to the merchant’s account.
BankIT uses Aadhaar linked bank accounts for transactions and balance inquiries with a secure biometric method of AePS (Aadhaar enabled Payment System). This enables our customers to benefit from an effortless, safe, and biometric service.
A BankIT user can transact 1 lakh per year by completing minimum KYC norms and opening a zero balance account for a business that requires fast multiple accounts issuance.
BankIT encourages customers to register with full KYC norms, as it offers an extension to the spending limit of up to ₹5 lakhs/month for users with complete KYC. BankIT services allow you to add a bank account based on full KYC norms.
Instantly, activate a prepaid plastic card through a fully secure basic KYC process that doesn’t require any bank account with BankIT services.
A 24/7 customer service is in continuous assistance for BankIT customers is provided. Also, an instant deactivation or card blockage can be done in case of theft and loss.
To help its customers control their useless expenditures BankIT offers a service that can set a spending limit on cards to prevent overspending.
Conclusion
Even though the RBI has restricted fintech for the security of digital users, it cannot underestimate the benefits of companies that follow full KYC guidelines and innovate the services according to customers’ requirements like BankIT.
