India’s digital payment sector is undergoing a remarkable transformation, driven by an ever-surging demand for accessible financial services. Amid this lies the digital onboarding process – the initial gateway for both merchants and customers to access financial services. While onboarding, complying with regulatory guidelines is not just a critical factor for ensuring trust, and security but also a legal obligation. For all digital payment platforms, a compliant onboarding process is a key component of customer acquisition, sustainable growth, and regulatory adherence.
Regulatory Compliances for Digital Onboarding in India
With RBI’s evolving KYC and AML directives, regulatory compliance and protocols are now more important than ever. Adapting to India’s regulatory landscape is crucial for ensuring a smooth and compliant onboarding process. A few compliances include:
- RBI norms: The Reserve Bank of India (RBI) has a stringent set of guidelines for KYC, digital lending, and payment processes.
- Data Privacy: With the Digital Personal Data Protection Bill (DPDP) in effect, ensuring secure data handling, consent management, and data localization during onboarding is mandatory.
- Reporting mandates: Financial institutions have specific reporting obligations to regulatory bodies, which requires the collection and submission of accurate and well-documented onboarding data.
Compliance Procedures Explained
The emergence of digital technologies has brought a significant evolution in onboarding, particularly in India. Onboarding digitally has streamlined the process with:
- eKYC and Aadhaar-based authentication
Aadhaar, India’s unique identification system, has transformed digital identity verification. For ex:
- eKYC allows for instant, paperless verification using Aadhaar details, while Aadhaar-based authentication (like OTP verification) simplifies digital consent and signing.
- Other forms of KYC includes Video KYC that enables live video interactions for identity verification, reducing the need for physical presence.
- And The Central KYC(CKYC) Registry aims to standardise and centralise KYC records, enabling financial institutions to access verified customer data more efficiently once a customer’s CKYC is complete.
- API-driven onboarding and workflow automation
APIs (Application Programming Interfaces) like Identification verification API, Fraud screening API, Payment verification API, and Data automation API are the backbone of modern digital onboarding. They enable seamless integration of various verification services, automating backend operations and accelerating the entire workflow.
iServeU as platform leverages APIs, SDKs, and Plug N Play options to facilitate these integrations.
A Brief Overview Of Compliance Requirements While Onboarding Digitally
A smooth onboarding process, for merchants or customers requires a diverse approach.
Merchant Onboarding
 Identity Verification:
Requires identity proof like PAN and Aadhaar, along with a valid address proof.
 Business Verification:
Checks business registration and licenses
 Bank Mapping:
Links merchant’s bank account using Penny Drop API
 Risk Profiling:
Reviews financial health, past transactions, and industry risk
 GST Verification:
Confirms GST details like registration date, status, and type of business
Customer Onboarding
 Voter ID / DL / Passport Checks:
Confirms identity info (name, DOB, address, photo, validity)
 Aadhaar eSign:
Allows digital signing using Aadhaar
 PAN Verification:
Validates PAN details and Aadhaar–PAN link
 KYC & ID Verification:
Uses Aadhaar, PAN, Voter ID, DL, and Passport to confirm identityÂ
 e-KYC Setu:
Retrieves Aadhaar XML data using OTP/Face match
 Credit Checks:
Fetches credit history and score from credit bureaus
 Consent Architecture:
Captures the customer’s approval for data use and terms
 UI/UX:
Provides simple, guided digital onboarding experience
Conclusion
In the evolving digital world, customer expectations are evolving rapidly. Organizations must deliver onboarding journeys that are fast, frictionless, and fully compliant, without compromising on regulatory standards. iServeU’s robust payment infrastructure not only mitigates fraud and data breaches but also ensures long-term trust and customer retention.
Explore how iServeU can transform your onboarding process—request a demo today!
Author
Ramji Tripathy
FinTech professional and XIMB alum, driving sales strategy, pre-sales, and partner growth across APAC, Middle East & Africa
