Moral Of The Airtel Payments Bank Story: Read The Fine Print
Most investors are familiar with the statement, “Please read the offer document carefully before investing.” Now it seems even those looking to buy a mobile phone connection need to be aware of what they are signing up for.
Because the fine print in the innocuous looking application form could mean that they walked into the store to buy a telecom service and left with a new bank account as well.
It happened with Bharti Airtel Ltd.’s customers. Nearly 31 lakh of them.
Last week, India’s leading telecommunication services provider ran foul of the Unique Identification Authority of India – the custodian of Aadhaar. The UIDAI temporarily barred Airtel from conducting Aadhaar-based the e-KYC, or electronic know-your-customer verification.
The UIDAI said, in a Dec. 19 notification, that Bharti Airtel was using the Aadhaar-based verification process to also open Airtel Payments Bank accounts for those who signed up for telecom services without the customers’ informed consent.
Bharti Airtel had to pay an interim penalty of Rs 2.5 crore before it was permitted by UIDAI, on Thursday, to resume Aadhaar based e-KYC services for mobile phone connections. The bar on using it to open payments bank accounts persists.
Further to our statement dated Dec.16, 2017, we would like to confirm that the UIDAI has allowed Bharti Airtel to resume Aadhaar based e-KYC services. We continue to engage with the authorities.Bharti Airtel Statement (Dec. 21)
Here’s What Happened
To be sure, the Reserve Bank of India, in its operating guidelines for payments banks, has said that such banks can use KYC details collected by a telecom company if the telecom company is a promoter, or part of the promoter group entity, of the bank. This, however, is subject to customer consent.
UIDAI’s notification said Bharti Airtel was opening payments bank accounts without customer consent. Or rather, informed consent.
There have been complaints that, when an Aadhaar holder visits the telecom service provider for verifying his mobile number with Aadhaar, Airtel is opening his payment bank account and putting that bank account on NPCI’s APB mapper overriding the existing bank account mapping without the informed consent of the Aadhaar holder.UIDAI Statement
Airtel did not respond to BloombergQuint’s queries on whether it had received informed consent from its customers or not.
Since the company wouldn’t answer the question, BloombergQuint visited a retail store in Mumbai selling mobile connections of Vodafone, Reliance Jio, and Bharti Airtel. The Airtel application form for a prepaid connection made no mention that signing up or doing e-KYC for a phone connection would imply that a customer has also consented to opening an Airtel Payments Bank account. Even the retailer made no mention of this service whilst handing out the form.
The form does cryptically list Airtel Money services in its terms and conditions, without making clear if subscribers will automatically be signed up for the mobile wallet services.
By enrolling for the Airtel Money services, you acknowledge that you have read, understood and hereby agree to be bound by the terms and conditions for the Airtel Money services available on the website www.airtel.in/money.Airtel Prepaid Application Form
Interestingly, that Airtel Money website redirects users to the Airtel Payments Bank page on the Airtel website. That is the only link between the mobile phone connection application form and the payments bank service.
A section of the terms and conditions in Airtel’s prepaid application form that relates to Airtel Money Services.
Consent Vs Informed Consent
AP Hota, former chief executive officer of the National Payments Corporation of India, told BloombergQuint that Airtel had probably received customer consent “technically”.
In spirit they (the customers) may not know that a bank account was being opened.AP Hota, Former CEO, NPCI
Two other experts told BloombergQuint, on the condition of anonymity, that several telecom companies and banks often skirt consent requirements.
One of them, a senior lawyer, explained how retailers help obfuscate the consent process. Most of them use an agent sales application—that is, when a prospective customer wants to get a new mobile connection, he or she is shown multiple options on the app. The retailer may choose various services, which the user unknowingly agrees to by providing his or her biometric for e-KYC verification. As a result, in several cases, there maybe consent, but not informed consent, the lawyer said. That also explains why customers visiting retailers to link their existing mobile numbers with their Aadhaar, would automatically get onboarded on to the payments bank via the app.
The other expert, a former top executive at a private sector bank, said telecom companies often use customer consent received for one service to provide multiple other services.
In the case of Airtel, the matter came to light only because it chose to seed the payments bank accounts to the Aadhaar mapper of the NPCI, the banker said. This resulted in the payment of government subsidies to several Airtel Payments Bank accounts without the knowledge of the customers.
These transfers took place because of an NPCI rule that said the latest bank account seeded to the Aadhaar mapper would become the default one for such subsidy payments.
On Dec. 19, the UIDAI via a gazetted notification rectified this situation, saying that banks would now require to get explicit informed consent from a user before changing the default account mapped to the Aadhaar database.
Airtel, on its part, has said it would transfer Rs 190 crore in subsidies received by various accounts to the NPCI.
That may bring an end to this particular incident, but it does little to quell customer concerns on the fine print in such service application forms…and the devil that lies within.