This is why Amazon wants your Aadhaar number

• Amazon Pay, Amazon digital wallet in India, is rolling out user verification (KYC) for its customers.
• Reportedly submitting biometrics using Aadhaar credentials is a faster process for verification than other physical documents.
  
• But concerns related to Aadhaar aren’t about its convenience, but about its security.

Amazon Pay is the next digital wallet to roll out physical customer verification — but there’s a catch. If you use your Aadhaar card for verification, the process is a lot quicker than if you other methods of verification — passport, drivers license, voter ID, or bank statements.

It’s not really Amazon’s fault because the biometric verification through Aadhar is simple matter of verifying your fingerprint through a fingerprint reader. But, with other physical documents, the company needs people on the ground to verify the authenticity of the documents.

Simply put, the verification through Aadhaar is a lot cheaper for Amazon as compared to using other documents for physical verification.

Amazon Pay and other digital wallets have to enforce user verification in line with the Reserve Bank of India’s new policy on data localisation.

Not an Amazon-specific problem

India’s central bank, the Reserve Bank of India, rolled out its data localisation policy rendering 95% of mobile wallets in the country vulnerable to being shut down. The directive of the policy makes it mandatory for all digital wallets to have biometrics or physical customer verification in place.

Even PayTM nudged its users into adopting KYC in order to continue using their wallets. If your PayTM account isn’t verified, you can still receive payments from other users and make payments at retail outlets using the QR-code but you can’t send out money to other users directly.

Other digital wallets like MobiKwik have shifted to diversifying themselves because they haven’t been able to push their customers towards KYC norms with RBI’s February deadline coming up.

The case with Aadhaar

India’s top court has already ruled that private companies can’t make it ‘mandatory’ for Aadhaar to be the only method of user verification. But that doesn’t negate it as an option.

The issue that people are facing with Aadhaar isn’t whether or not it’s convenient, but whether or not it’s safe. The series of data breaches associated with the Aadhaar system didn’t happen through actual government database, but through third-party organisations that were using Aadhaar information as user identification.

A study by Velocity MR estimates that as many as 80% of respondents in India are concerned about data security when it comes to giving out their Aadhaar card information anywhere. It’s not just about identity theft but information being leaked that leads to customers being spammed over text and email — or even phished.

This is probably why Amazon is looking to roll out its own Unified Payments Interface (UPI) because, in that case, KYC isn’t mandatory for setting up an account. The verification done by the respective banks is enough.

See also:
In India, Amazon's fight is not just with Flipkart, but with PayTM, Google Pay and Truecaller

Indian government portal leaks 8.9mn Aadhaar details, again

Supreme Court clarifies that Aadhar isn’t mandatory for a new SIM connection