Indian Start-Ups Seek Government Approval for Gig-Worker Identity Verification
In recent months, Indian start-ups in the food delivery, e-commerce, and ride-hailing sectors have been actively seeking government approval for gig-worker identity verification. This initiative is driven by the pressing need for robust Know Your Customer (KYC) processes, particularly in light of the challenges posed by the inability to conduct large-scale Aadhaar online KYC checks.
The Need for KYC in the Gig Economy
Industry insiders have pointed out that the lack of streamlined KYC processes has hampered the growth of gig platforms. The Ministry of Electronics and IT (MeitY) has recently intensified its scrutiny of unauthorized Aadhaar-based onboarding services, blocking access to platforms like Zoop, Surepass, and Digitap. This clampdown aims to prevent illicit access to the Unique Identification Authority of India (UIDAI) database, thereby ensuring the integrity of the Aadhaar ecosystem.
Under current regulations, any private entity wishing to utilize the Aadhaar framework must obtain explicit permission from the relevant government department. Without this approval, companies face significant legal risks and enforcement actions, creating a pressing need for clarity and support from the government.
Global Context: Fraud Challenges in the Gig Economy
Globally, the gig economy is grappling with significant fraud challenges. A report by Incognia revealed that fake accounts are involved in 57% of driver-side fraud cases. In the UK, food delivery firms are under increased scrutiny due to concerns about illegal workers, prompting them to adopt more stringent verification measures, including selfie biometric checks.
In India, the situation is similar. The Economic Times has highlighted biometric service providers like Protean eGov Technologies, which are poised to bridge the verification gap once MeitY grants the necessary approvals. Protean can facilitate authentication requests through a secure channel directly into the Aadhaar infrastructure, thereby enhancing the KYC process for gig workers.
The Role of Protean eGov Technologies
Bertram D’Souza, the Chief Product and Innovation Officer at Protean, emphasized the importance of Aadhaar authentication services for private platforms. He stated, “We now have the capability to offer Aadhaar authentication services to private platforms, particularly relevant for specific use-cases, such as verifying gig workers at scale, where the trust built into Aadhaar can significantly strengthen KYC processes.”
On January 31, the government announced that private companies could use Aadhaar for specified purposes, provided they receive approval from the relevant ministry. This development is seen as a significant step towards legally verifying delivery and frontline workers, a necessity for the burgeoning gig economy.
The Challenge of Unauthorized Methods
Despite the clear regulations, some e-commerce operators have resorted to using unauthorized methods to access Aadhaar data, which is illegal according to UIDAI and MeitY. Wriju Ray, Chief Business Officer at IDfy, a Mumbai-based biometric identity verification start-up, mentioned that they are in discussions with these e-commerce players to transition them to Digilocker-based verification or a redirection-based process for verifying delivery executives against offline Aadhaar.
However, the challenge remains that many gig workers do not have Digilocker installed on their phones, complicating the onboarding process. With formal approval of the Aadhaar rails, identity verification firms could act as intermediaries between gig platforms and authorized Aadhaar gateways, all while adhering to a strict consent framework.
Innovations in Digital Verification
In a bid to enhance security, UIDAI recently introduced a QR code-based system for more secure digital document verification. UIDAI CEO Bhuvnesh Kumar announced that a new Aadhaar app may be ready within two months, which could further streamline the verification process for gig workers.
Protean’s quarterly presentation from March revealed that the company has handled approximately 3.275 billion Aadhaar authentication requests since its inception. In the fiscal year 2024–25 alone, it processed 560 million authentications, averaging about one million approvals per day, and conducted around 1.2 million electronic KYC transactions daily.
According to UIDAI data, June saw 1.1 billion authentication and 287 million KYC processes through Aadhaar, marking a 7.8% year-over-year increase. Notably, a record 158.7 million face authentication transactions were recorded, up from 46.1 million in June 2024.
Conclusion
As Indian start-ups in the gig economy navigate the complexities of identity verification, the push for government approval for Aadhaar-based KYC processes is more crucial than ever. With the potential for enhanced security and streamlined operations, the collaboration between the government and private entities could pave the way for a more robust and trustworthy gig economy. As the landscape continues to evolve, the focus on secure and efficient identity verification will remain a key priority for stakeholders across the sector.
