According to industry sources, fintech players including Amazon Pay were told by RBI in 2017 to normalize video KYC instead of doing it physically by going door to door. They were also told that video KYC has to be done by the fintech players themselves, not by third-party agencies.
The sources say Amazon ramped up its technology and hiring efforts for video KYC. All of its KYC is now video-based. However, there was some initial delay in migration for many fintech players, including Amazon Pay, for which RBI has now penalized them.
The Reserve Bank of India on Friday imposed a penalty of Rs 3.06 crore on Amazon Pay (India) Pvt Ltd for non-compliance with provisions of the Prepaid Payment Instruments (PPIs) norms and Know Your Customer (KYC) norms. Other entities such as Ola Financial Services, Obopay Mobile Technologies, and Manappuram Finance Ltd have also been fined by the RBI for disregarding the same norms. While Obopay was fined Rs 5.93 crores, Ola Financial Services and Manappuram Finance were fined 1.67 crores and Rs 17.63 lakh, respectively.
In a statement, the central bank said, “It was observed that the entity (Amazon Pay) was non-compliant with the directions issued by RBI on KYC requirements. Accordingly, notice was issued to the entity advising it to show cause as to why penalty should not be imposed for non-compliance with the directions.”
After taking into consideration the response given by the entity, the central bank concluded that the charges against it were substantiated and warranted the imposition of a monetary penalty. “The penalty has been imposed in the exercise of powers vested in RBI under Section 30 of the Payment and Settlement Systems Act, 2007. This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the entity with its customers,” RBI said.
Responding to RBI’s decision to impose a monetary penalty, an Amazon spokesperson said, “We remain deeply committed to operating as per regulatory guidelines and maintaining a high compliance bar, while we innovate on behalf of our customers to offer them a safe and convenient payments experience. We continue to work closely with the authorities to share our commitment with them.”
Interestingly, Amazon Pay (India) has been approved in principle by the central bank for a payment aggregator’s (PA) license. It is one of the 32 existing entities that were operating as PAs, and which received RBI’s nod. Amazon Pay (India) is the payments arm of the e-commerce behemoth Amazon. Along with providing PA services, it also facilitates UPI transactions on its platform.
According to industry sources, fintech players including Amazon Pay were told by RBI in 2017 to normalize video KYC instead of doing it physically by going door to door. They were also told that video KYC has to be done by the fintech players themselves, not by third-party agencies.
The sources say Amazon ramped up its technology and hiring efforts for video KYC. All of its KYC is now video-based. However, there was some initial delay in migration for many fintech players, including Amazon Pay, for which RBI has now penalized them.
