GlobalData predicted mobile wallet users in India will make more than INR800 billion ($12.3 billion) worth of transactions during 2017, with the industry expected to process INR2.8 trillion by 2021.

The rapid growth from the INR380 billion recorded in 2016 is in spite of new regulations announced by the Reserve Bank of India in early October to tighten rules for companies in the sector and prevent money laundering, the research company said.

New guidelines introduce strict financial requirements for market entry and increase the level of data companies must collect on the majority of their customers – known as Know Your Customer (KYC) compliance.

GlobalData senior analyst Ravi Sharma said while the regulations were unlikely to impact larger wallet providers, it could be “challenging” for smaller players in the industry.

He added it would likely lead to some wallet providers exiting the market or being acquired by larger companies.

“Ensuring KYC compliance is bound to increase cost incurred in the acquisition of new customers as well as the verification of existing users,” Sharma said.

“While it may not affect bigger players such as Paytm, as they are already working with their customers to update KYC, the additional compliance costs are likely to impact smaller firms.”