Payment through UPI and QR code has become a part of daily life in India. From tea lorries to grocery stores and vegetable traders, even small businesses are using digital payments extensively. But now a new concern has arisen regarding the Re-KYC process for merchants. If the required verification is not completed by September 15, some merchants’ QR-based payments may be affected. However, it does not mean that UPI or QR code payments will stop across the country after September 15. The concern is mainly for small traders whose Re-KYC is still pending.
What is Re-KYC rule of RBI?
The Reserve Bank of India (RBI) regulations require periodic updating of KYC information for merchants and business accounts. Currently, the deadline for completing the Re-KYC process for some merchants is tied to September 15. According to payment aggregators and fintech companies, a large number of small merchants are yet to be verified. In view of this situation, the companies associated with the industry are demanding an extension of the deadline before the RBI. Completing the KYC process on time can be challenging, especially for small shopkeepers, lorry-pullers and other small traders. If a merchant does not complete the required verification in time, there is a possibility that his payment setup may be banned or limited. Hence it may be important for merchants to check their KYC details timely and complete the Re-KYC process if necessary.
What will be the problem for consumers if QR code is discontinued?
Suppose you buy goods from a small shop and scan the shopkeeper’s QR code to make payment. If that merchant’s Re-KYC is not completed and his QR payment is affected, your UPI payment may not be successful. In such a situation, the customer has the option of paying in cash. In some cases other options like direct bank account transfer may also be available, but it will depend on the respective merchant’s payment arrangements. QR payment has become very important especially for small markets, vegetable trucks, tea kettles and small shopkeepers. So if the QR codes of such merchants don’t work, there may be some difficulties in daily transactions for some time. However, it’s not fair to assume that every merchant’s QR code will be discontinued altogether.
How many small business owners could be affected?
There is more concern about small traders in this whole matter. According to available estimates, around 30 to 35 percent of small and lorry-based traders may be affected by the deadline and around one million small traders are estimated to be at risk. It is also feared that only about 80 per cent of the verification may be completed by the stipulated time. If the process is not completed on time for remaining merchants, their digital payments are likely to be affected. It is for this reason that payment companies and those associated with the fintech sector are demanding more time. However, these figures are based on estimates and the actual impact will depend on the next steps of the RBI and the respective payment companies. The best precaution for merchants is to check their KYC status with their payment provider.
Will UPI payments stop across India?
Most importantly, the entire UPI payment system in the country will not be shut down after September 15. The UPI system will continue as usual and digital payments of most merchants are also likely to continue. The impact may be primarily limited to merchants whose required Re-KYC has not been completed and whose payment setup is processed. So customers need not panic. However, it may be useful to carry some cash as a precaution when shopping in small markets or lorry-infested areas. On the other hand, merchants should also check their KYC process to avoid last-minute hassles. Currently, the industry is eyeing the next decision of RBI. It remains to be seen whether the deadline of September 15 remains the same or if small traders are given more time. So the claim that “UPI will be stopped across the country after September 15” is misleading; The real issue relates to QR payments of certain merchants who have not completed Re-KYC.