After RBI mandated digital payments wallets to make sure all their users have registered KYC accounts, or no one will be able to receive and transfer funds, the service providers went into a state of frantic on how they will hold back users and make them use their wallets.
The usage and the total number of transactions on digital wallets have seen a sharp drop since March.
Users have to do their KYC in order to keep using their wallets to make and receive payments. Companies have lost millions of users since the new RBI KYC mandate. Several users again either went back to plastic cash or started using non-KYC wallets like Google Tez (now Google Pay).
After such a debacle, now major players like Alibaba-Berkshire Hathaway backed Paytm and Flipkart-owned PhonePe has stopped accepting Aadhaar numbers for KYC. But, why so?
Several Paytm and PhonePe users recently found out that both the payments wallets no more accept Aadhaar as a valid KYC document.
Supported Documents For KYC On Paytm & PhonePe
Paytm and PhonePe users though can register with other government documents. If you want to do your KYC on Paytm or PhonePe, the companies only now support:
- Voter ID
- Driving Licence
- Nrega Job Card
- PAN Card
- State Government ID
- Central Government ID
You won’t be able to transfer or pay any funds without getting the KYC process done on your wallet, Paytm and PhonePe respectively.
Also recently RBI barred Paytm Payments Bank from opening any new Payment Bank account due to suspicious fund transfers over the maximum limit.
Without Aadhaar all the fintech users and providers both will face a lot of trouble. Onboarding customers will come to a halt, and this will add to the other costs and lower number of new users.
Aadhar stopped all KUA and sub KUA to do validations!! Suddenly , all fintech businesses banking on Aadhar left scrambling!! India stack story will crumble very soon if it continues in this manner.@India_Stack @NandanNilekani @UIDAI
— Jitendra Gupta (@guptajiten) April 4, 2018
The Aadhaar e-KYC On Paytm & PhonePe Can Be Hacked
Well, to check it out, our Offline Story team did a test with a PhonePe wallet. We selected the Central Government ID option, gave Aadhaar number and below wrote Aadhaar in the document type.
The Aadhaar number was still accepted and transaction limit of Rs 10,000 in the wallet was permitted.
So, for the new users who still haven’t done their KYC, and Aadhaar is the only government ID you have, try this trick to use the wallet for now. This will only work for PhonePe, and not Paytm.