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Paytm opts for Aadhaar-based electronic Know Your Customer

Business Standard:  September 12, 2016

New Delhi:  Online wallet major Paytm has introduced Aadhaar-based electronic Know Your Customer (eKYC) to make customer verification process more convenient, paperless and real-time.

“We are building India’s largest eKYC customer network to bring half a billion Indians to the mainstream economy. We have aggressive targets to become the largest Aadhaar-based eKYC company in the country,” said Vijay Shekhar Sharma, founder and chief executive officer, Paytm.

The company, on the verge of launching its payments bank, has been thinking of moving to unified Aadhaar-based verification system for its customers for some time now.

“Regulated entities like banks and wallet providers are required to carry out certain customer identification procedures while establishing account-based relationships and undertaking transactions. These procedures constitute the KYC process of customer verification and help identity theft, financial fraud, money laundering and terrorist financing,” said the company.

The conventional KYC process involves filling up of forms, attaching the latest photograph and copies of identity and address proof, verification of the details provided, data entry into customer information management systems, and archival of all the paper documents. The process is fraught with operational challenges in managing the physical documents. Also, it takes several days for the verification process to be completed. It is also prone to fraud as documents can be easily forged.

“Delighted that Paytm is making a huge commitment to Aadhaar-based eKYC. The paperless and cashless era is coming soon to the smartphone in your hand,” said Nandan Nilekani, co-founder of Infosys and former chairman of the Unique Identification Authority of India.

In the past few weeks, Paytm has expanded its network of partners, agents, kiosks, and technological solutions to offer its consumers flexibility and convenience. The digital wallet major is also in advanced talks to raise $300 million in fresh funds.

The company said Paytm’s Aadhaar-based eKYC would be entirely paperless, instant and secure. Customer’s identity would be verified instantly on the basis matching biometric scan of fingerprint or iris against Aadhaar database.  The company, which is also taking a major omni-channel approach, would be using physical centres for verification of its customers. The firm has also reportedly hired 3,000 ground agents who would verify its customers.

“When a customer requests to upgrade their Paytm account, they can either choose to visit the closest Paytm centre near them or request a visit from a Paytm agent at their preferred address. The Paytm agent carries out a quick and easy eKYC process using mobile-based biometric scanner. Customer’s consent is also captured using Aadhaar-based eSign, ensuring that the entire process is paperless. The process is also extremely secure since biometric details are used to verify identity, thereby reducing the possibility of fake or forged accounts,” said the company.

According to multiple sources, other than existing investors such as Chinese e-commerce giant Alibaba and SAIF Partners, the new round of fundraising will see participation of Singapore’s Temasek Holdings, Taiwanese chipmaker MediaTek and Wall Street major Goldman Sachs.

VERIFICATION OF CUSTOMERS

  • Paytm’s Aadhaar-based eKYC would be entirely paperless, instant and secure, the firm said
     
  • Customers’ identity would be verified instantly on the basis of matching biometric scan of fingerprint or iris against Aadhaar database
     
  • Paytm would be using physical centres for verification of its customers
     
  • It says it has hired 3,000 ground agents who would verify its customers

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.