Digital payments: Need simpler KYC norms to attract smaller merchants, says Mastercard

Global payment services company Mastercard is hopeful that the government would soon come up with simpler KYC norms — KYC Lite — to enable smaller and marginalised kirana store merchants get into the mainstream faster.

“We are hoping that the government would follow up with its demonetisation initiative with KYC-Lite norms for small merchants. More merchants will start coming into the financial ecosystem once the norms of merchant acquisition and on-boarding becomes simpler and faster,” Ravinder S Aurora, Group Head, Senior Vice-President, Global Policy Affairs & Community Relations, Mastercard, told BusinessLine here.

Rohan Mishra, Vice-President - Public Policy, South Asia, Mastercard, said that the current on-boarding norms for merchants is very cumbersome.

“The process of on-boarding, which currently takes six to seven days, will be significantly reduced if the government were to come up with KYC-Lite (simpler know-your-customer norms),” he said.

Mastercard is also hopeful that the government — on the heels of the demonetisation move — would take corrective action against surcharging by merchants.

“We, at Mastercard, don’t support or endorse surcharging,” Aurora said.

At a point of sale, if one were to tell the customer that cash will cost you ₹100 and card usage for the same transaction will cost you (customer) ₹102, there is dissonance.

“Government has to issue a mandate to merchants that surcharging is illegal. There has to be some enforcement at some point in time,” Aurora said.

Mastercard, in association with the government, is trying to build a helpline so that any customer who finds a merchant resorting to “surcharging” could call a number and convey the information to the authorities. Any such mechanism (like a helpline) to tackle surcharging will bring in transparency, accountability and shift from cash to digital, Aurora added.

He also said that the recent demonetisation move — which came as a surprise — has resulted in some “behavioural shift” among card users in India. More people are now looking to use their cards at point-of-sale devices and not just at ATMs.

Another development, thanks to demonetisation, is that a good number of inactive debit cards have now got activated, Mishra added.

Aurora also said time was ripe for the government to incentivise digital payment usage — both at the consumer level and at the merchant end. Incentives like tax breaks will be useful for people to choose digital over cash, he added.