In a move that would upgrade its digital wallet customers to account holders of its upcoming bank, ecommerce company Paytm has launched an electronic, Aadhaar-based client-authentication system.
The development was first reported by Economic Times.
This would enable its customers to carry out transactions exceeding Rs 10,000 a month. The electronic know-your-customer system (eKYC) will be offered through Aadhaar, which is part of an initiative called India Stack.
Paytm was among 11 entities that received in principle payment bank licences from the Reserve Bank of India last year. Others who got the approval include Reliance Industries, Vodafone and Bharti Airtel.
Paytm CEO Vijay Shekhar Sharma told ET, “We believe India Stack is a great foundation of technology resources capable of building useful services for the masses. Aadhaar is the foundation of it and we can leverage it from day one.”
India Stack allows third-party entities to use Aadhaar for authentication, digital signatures through eSign, a unified payment interface and privacy-protected data sharing.
“With eKYC, the Paytm payment bank will have a great start with an Aadhaar-linked savings account. It also helps us build superior AML (anti-money laundering) and fraud protection systems as each customer is biometrically verified,” said Sharma.
The e-KYC provides near-instant verification of a customer’s identity and address on the basis of fingerprint or iris scans that are compared with biometrics recorded in the Aadhaar database and authenticated.
Paytm is targeting the acquisition of over 25 million additional KYC customers in the coming year, stated Sharma.
Reliance Chairman Mukesh Ambani announced two weeks ago that Reliance Jio Infocomm’s SIM cards will be activated instantly with eKYC verification using Aadhaar data and a customer’s fingerprints.
Infosys cofounder and former chairman of the Unique Identification Authority of India, Nandan Nilekani delineates how the eKYC for Paytm wallets will help the company once its payment bank goes live.
Most Paytm wallets hold less than Rs 10,000 in cases where customer authentication hasn’t been done. “Now they want to migrate these customers to the bank, but a bank requires KYC. So Paytm is upgrading them from a Rs 10,000 wallet to a Rs 1 lakh wallet, which has KYC done already. When the bank goes live, these customers can simply migrate to the bank,” explained he.