News on Medial

RBI’s stricter KYC rules may slow merchant onboarding 90%: experts

Economic Times · 7m

The Reserve Bank of India (RBI) has proposed stricter Know Your Customer (KYC) rules for payment aggregators, which may significantly slow down the onboarding of online merchants. Existing players will need to engage in re-KYC exercises for existing merchants, while new merchants will need to go through a bank-grade KYC process. Industry insiders estimate that this could lead to a 90% drop in merchant onboarding and increase operational costs for payment companies. The proposed rules also suggest physical verification of merchants' outlets and the cessation of direct settlement of funds from merchant escrow accounts to vendors. Small sellers may find the onboarding process demanding and may revert to alternate payment methods. Overall, the proposed rules could have a significant impact on the digital payment ecosystem in India.