Why Aadhaar Verdict on eKYC is a Big Blow to Reliance Jio & Paytm
Payment wallets and telcos need to decide their next move. 
Payment wallets and telcos need to decide their next move. (Photo: iStock/Altered by The Quint)

Why Aadhaar Verdict on eKYC is a Big Blow to Reliance Jio & Paytm

The verdict on Aadhaar and its legalised existence was rubber stamped by the Supreme Court on Wednesday, 26 September, but the judgement came along with few riders. The apex court has ruled that private companies cannot demand that Aadhaar be linked with various accounts.

The importance of Aadhaar for e-verification or eKYC of users has become a routine exercise for various private entities, but none more so than the likes of Reliance Jio and Paytm. These are two companies have flourished under the current government’s Digital India movement, which has smartly allowed them to operate within the ambit of Aadhaar.

With more than 200 million users each, both Reliance Jio and Paytm have now suffered a big blow to their business models, now that eKYC process by private companies via Aadhaar has been scrapped.

The question that one needs to ask is, how will these entities fight back? Do they have a Plan B in place that lets them tackle this development?

By the looks of it, both the companies didn’t see the judgment coming, which explains the reason behind them staying silent on the matter. Reliance Jio, since its commercial launch two years back, has relied on Aadhaar verification to sign up users to its network, which, according to the last reported data from TRAI, stands at 227 million.

Signing up these many users at the fraction of a cost of acquiring consumers was smoothly done at its end, but what will the telco do now? Even the Cellular Operator Association of India (COAI) has pointed that its member operators will comply.

Also Read : Reliance Jio Has 227 Million Users in India, Airtel Loses Steam

We respect the Aadhaar verdict of the Hon’ble Supreme Court, the apex court of India. We are going to review the judgement and its implications. We shall await further orders and instructions from DoT.Our member operators as always will definitely comply with the law
Rajan S Mathews, DG, COAI
Telcos will have to rely on other documents to sign up new users.
Telcos will have to rely on other documents to sign up new users.
(Photo: Liju Joseph/The Quint)

Having said that, the COAI was quick to say that it will wait for the Department of Telecom (DoT) to give further orders on the matter. While the telcos wait for the orders to come through, it’s essential they are instructed to remove the existing data (whatever they have collected) for users who’ve already enrolled via Aadhaar.

Same is the case for Paytm, which is a private-owned payment bank now, putting it directly within the ambit of the Reserve Bank of India (RBI). It was basically the RBI that had notified all prepaid wallet players to ask for Aadhaar to be linked to mobile wallets which allows them to send money.

Interestingly, the eKYC via Aadhaar option was recently made unavailable to Paytm users, along with PhonePe and Freecharge, which The Quint managed to confirm from on these payment entities. Could this have been Paytm preempting the Aadhaar verdict and looking at contingencies?

Also Read : Paytm & PhonePe Mobile Apps Not Accepting Aadhaar For KYC

It’s now up to the companies to decide the future course of action. Coming to the legality part of dismissing private companies from asking for Aadhaar details, it’s a lot murkier than you can imagine right now.

Also Read : Sec 57 Of Aadhaar Act Struck Down. Here’s What It Means For You

After all, the judgment comes down heavily on Sector 57, but doesn’t state what needs to be done to displace it. This loophole, many believe, could enable the private companies to contest (hopefully not) and get the eKYC process up and running once again.

It’ll be intriguing to keep an eye on both these giants and see whether they are ready to adhere to the judgment and function sans Aadhaar.

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