BHUBANESHWAR/NEW DELHI: While the panic triggered in the fintech segment immediately post the Supreme Court’s Aadhaar verdict of Wednesday has subsided, companies still expect to bear much higher verification costs for those who can now insist on alternate verification methods.
Industry representatives say that their reading of the SC verdict is that private companies cannot demand Aadhaar, but can use Aadhaar e-KYC processes if the customer consents.
Experts who spoke to TNIE say that the fallout is unlikely to be as catastrophic as feared, since most firms already offer alternative modes of verification for those who did not wish to use Aadhaar. “It will lead to higher verification costs for the alternatives, but those were options that we were already providing,” said Harshil Mathur, CEO and co-founder at Razorpay.
“Firms which indulged in big-ticket transactions were anyway doing physical KYC as the existing policies on OTP-based e-KYC permitted loans only up to 60,000,” added Vikas Kumar, CTO & co-founder of LoanTap.
Ranjit Punja, co-founder and CEO, CreditMantri, says that the real problem will be for those smaller players offering products like instant loans, and whose business models are entirely based on Aadhaar. “They will have to tweak their business models and add in non-Aadhaar verification channels,” he said.
“The extent of the impact will only become clear once we have an idea of how many customers would opt out of Aadhaar verification”.
But, the industry does not expect too many to do so, since physical verification can take as long as 5-6 working days. Aadhaar-based e-KYC, on the other hand, is instant. Shankara Vaddadi, founder and director, I-lend, a peer-to-peer loan company says about 95 per cent of his borrowers already put their Aadhaar number in registration forms since they are aware that traditional modes of verifying is not only time consuming, but comes with extra charges.
However, if the number of people opting out is higher than expected, companies are staring at significant additional costs.
Apart from any new investments that go into tweaking channels and business models, verification costs might jump as much as seven-fold. According to Mathur, while Aadhaar verification comes up to Rs 15-20 per customer, others could cost as much as Rs 150.
Meanwhile, bigger players like Paytm, Phone Pe, etc., await more clarity. “We are waiting to hear what the Reserve Bank of India and UIDAI say will be required for wallets moving ahead,” Sameer Nigam, cofounder of PhonePe, said.