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Why KYC is important for a Digital Wallet?

In today’s era, the digital payment is in high demand. Due to its quick process and time-saving approach, most of the professionals and individuals are adopting it. The contactless payment solution also ensures safety but this is only possible when there is KYC integration.

KYC also is known as Know Your Customer is a process used by financial institutes for the verification of their customer to prevent making fake profiles and miss-use of the system. The companies that offer financial service can easily connect to their customers using the KYC process. With the help of mobile apps, financial institutes can easily make themselves KYC compliant. But many people want to know why KYC is important for a digital wallet?

Working of KYC process:

In this process, the user to present and validate his/her identity through submitted copies along with the original doc for verification. There is a legal and binding process in its working. There are some methods like video conferencing and video identification are involved. It can also involve other security checks and biometric tests.

In some cases, this can be done remotely online or at the office with the physical presence of the customer. The online verification is called an e-KYC process. KYC process is also useful in the QR code payment solution.

Its working is based on the advanced Artificial Intelligence (AI) in which the process is totally digitized. Additionally, it has a high level of security. KYC is important and good in the digital wallet solution to make the process simple.

Documents required in the KYC:

The main important document in the KYC is about identity proof with the photograph and address. In KYC the most important factor is address proof. Any document that does not contain address proof has no value. If any of the documents are without the address proof then the customer has to submit another document.

If talking about India, there are six documents that are notified by the Indian Government which are as follows.

  • Driving license
  • Passport
  • PAN card
  • Voters identity card
  • Aadhar card
  • NREGA job card

In India, the customer can use any of the above documents. In different countries, there are different documents. So depending on the regulation of the particular nation, the customer can give the document for the KYC process.

KYC Process
Know Your Customer (KYC) Process

Merits of integrating KYC into digital wallet:

– Increase the transfer rate:

With the help of KYC, many banks allow a high amount of cash to transfer. Within a single day, a customer can easily transfer approximately 50,000 per day. Many banks have increased the limit of transferring the amount after the integration of the KYC.

– Monitoring the risk:

The bank or any financial institute can easily determine the customer’s activity. This helps to prevent illegal or any other corruption activity.

It is because the organization knows the customer in real. All the valid details are held by the organization.

– Setup customer identity:

The customer identity can be easily established using the KYC. It acts as a bridge in the customer relationship process. Moreover, the organization has trust over the customer. The organization has legal documents and real details of the customer. In many organizations, KYC is important for mobile money payment solutions.

 – Reduce overall cost:

The paperless KYC brings a fall in the total cost. Also, it saves time because there is no requirement of visiting the doorstep of the customer. Even it is successful in remote locations. With new advanced technologies, it has become a cost-effective method. New and advanced technology has reduced the price.

– Ensuring safety:

Through KYC, things can be put into regulation. It limits the transferring of money. Additionally, it also offers security in the digital payment system. When the customer is transferring the payment, he or she could easily do it without any worry.

– Prevent the scamming:

Scamming is a major issue in the financial process. With the help of KYC, the scamming can be prevented. It is because the details of each customer are in the record in the organization. Even without the completion of KYC, the customer could not transfer the money through a digital wallet.

The illegal transactions could not be carried out when the KYC is integrated into the process. The customer avails the transparency in this operation. Now, most of the scams in the financial transactions are low due to KYC operation.

Verdict:

KYC is now a mandatory step in every bank and other financial institutes. It is offering mutual benefits to the customer and organization as well. The process is easy but still steps are taken to make it advance. The latest technology is integrating into the operation to make it smarter. For now, we can hope that the process will become quicker in the coming time.

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