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Amazon Customers Finding Loopholes in KYC Norms Using Gift Cards

Written by Jessee R

KYC, an acronym for Know Your Customer, is an identification and security standard set by governments of the world to cater banking and finance sector. Even the online payment banks and portals like Paytm ask their users to get their KYC done in order to make online transactions. Similar is the case with Amazon Pay wallets. Customers are required to get KYC of their account done in order to load money into their Amazon wallets and make purchases.

Amazon has been coming up with exciting Amazon Offers to keep its customers happy, however, with mandating of KYC details, customers are finding it hard to pay for their products in advance using banking transactions or use PayTm/ Amazon wallet for transactions.

The Reserve Bank of India made it mandatory for users of various Prepaid Payment systems such as mobile wallets to get their KYC done latest by February 28, 2018. If the customers do not comply with this regulation, they will not be allowed to load money into their online wallets. Restrictions are also imposed while carrying out remittance based transactions. Also, transfer of money from wallet to the bank account will also not be feasible if KYC is not completed. The users are allowed to use the money in their account to make purchases but once the wallet account becomes Nil, more money cannot be loaded in it until and unless the KYC of account is done.

Amazon Gift Cards

The mobile wallet companies struggle hard to ensure that their customers ply with the KYC norms and conditions in order to add money in their wallet. But the 21st century’s witty customer is able to find a way out of the process by using digital gift cards. If we take a look at Amazon Pay, the customers purchase gift cards of Amazon which help them to load money in their wallet. Once they purchase the gift cards, they get access to a unique code which once added in the wallet, loads money in it. In a report, Sunil Kulkarni, the MD of wallet firm Oxigen and Payment Council of India said that there are companies offering gift cards to the users to load money in their wallet. However, he did not mention the names of the companies he was referring to.

When we take a closer look at the Amazon Pay segment, we come across two segments- Money and Gifts & credits. While the money section refers to the money added to the wallet from the bank account, the Gifts and credits are generally the amounts retained from the gift cards which is then put into the online wallet of the customer.

Amazon agreed that it was possible to load money in the Amazon Pay wallet using the gift cards. In addition to this, Amazon revealed that gift cards cannot be used to transfer money into the bank account or for P2P or Peer to Peer transactions. The money can only be used for buying things from the e-commerce giant.

The director of Amazon Payments, Shariq Plasticwala said:

“The difference between gift card and the wallet is that firstly gift cards have an expiry date of one year. The money that you put in your wallet does not expire. The second difference (in case of wallet money) you are allowed to do a peer to peer transfer and also take that money back into your bank account once you do a full KYC. However with gift card, you do not have the option of doing these things.”

The Director and CEO of Amazon Pay, Mahendra Nehrurkar said:

“We need to understand the spirit of the regulation. It is meant for stored value account. The purpose of which is a flexible instrument that will allow for P2M, P2P and P2B transaction. As in the customer will be able to pay a merchant, a peer and bank-out that money to the bank account. When you all allow all these ways to take money out of a container that leads to all kinds of risks.”

The KYC norms for online wallets were made stringent because according the data released by RBI in December, a total of 31.98 crore transactions worth INR 14,334 crore were made in that month using online payment tools and a whopping 88% of these were made using the online wallets. It very well justifies the need of getting the KYCs done and ensuring the security of your money and your account.

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About the author

Jessee R

An experienced content writer and digital evangelist, Jessee designs and does strategic content planning at SocialVani. Apart from that, he likes to be a rebel and believes strongly in creativity and collaboration.

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