Paying It Forward: India's Mobile Wallet Story

India can be a perfect example of witnessing a mani-fold growth in the smartphone adoption...
Paying It Forward: India’s Mobile Wallet Story

India can be a perfect example of witnessing a mani-fold growth in the smartphone adoption. Touted as becoming the second-largest smartphone market globally, after China, India will have approximately 650 million smartphones and 18 million tablets by 2019, according to a study by Cisco. For majority of population, smartphones offer a plethora of opportunities, including carrying money.

Mobile Wallets are a way to carry your money, just like in a bank account. After making an account with the mobile wallet provider, the user can add money in it using their Debit, Credit Card, or Bank Account or Cash. The digitised wallets offer ease-of-use, are free of any transaction fee and don’t need to be fed with unending combination of numbers.

Optimal Adoption: A Long Way to Go!

Last month, Alibaba-backed Paytm announced that it had crossed a user base of 100 million wallets, while witnessing over 75 million transactions a month. The catch, says Paytm’s newly appointed head of the consumer Internet company’s product pipeline, Nitin Misra, is increasing the number of use cases. “It is a misnomer that the wallet adoption is less; people are signing up on the wallet and the number is increasing by the day. Yet, awareness needs to be driven and customer needs to be educated. We increase the number of use cases to increase the number of wallets,” Misra said.

Although PaytM has around 100 million registered wallet users, only one-third of the total number transact every month.

Mobile Wallet as a concept has been there since long, but its comfort and convenience is far from being optimally utilised. There could be a number of reasons behind the low adoption rate. “There is a massive unbanked population of smartphone users that could be a huge user base for mobile wallets. People are either not aware of the technology itself, or are not fully ready to give up their physical wallets,” said Ankur Saxena, CEO of Oxigen Wallet, an RBI-approved wallet that allows you to send and receive money through social channels such as Facebook, WhatsApp, Twitter, SMS and E-mail.

In a country like India, the total number of mobile users stands at 976 million. Out of which, 559 million users come from rural and 417 million users come from urban areas. However, out of these 976 million mobile users, only over 200 million mobile users are equipped with Internet on their phones. “And out of this, only 20 per cent of the total mobile phone using population is equipped to have a mobile wallet. The education about mobile wallets is limited to urban areas only. With almost half the mobile using population unaware of the use, the adoption will take a long time to happen,” said Nitin Gupta, CEO and Co-founder PayUmoney, which serves more than 4,000 merchants including leading eCommerce companies like Jabong, Snapdeal, Bookmyshow, Zomato, and Groupon among others.

Deepening Penetration

The number of merchants accepting digital payments today is way less for the users who are keen on using a wallet. So, companies are bridging the gap in several ways.  “We are using programmes such as Start-up Master Classes in various cities of India through which we are bringing more and more merchants online to start accepting digital payments. Other than sporadic merchant adoption, there is an issue of trust. Some of them think their money will just vanish in thin air. For that, we have the ‘Buyer Protection Cover’, which makes them feel safe and their money secure,” said Gupta of PayUmoney.

Oxigen Wallet is taking the offline route to tackle issues such as lack of trust and non-familiarity with digitised payments. Noted Oxigen’s Saxena: “Our services has the largest offline network in the mobile wallets industry with its physical presence at 2,00,000 retail touch points, which caters to the needs of the rural and rural urban pockets lot which is unbanked and wants a safe, secure, reliable and instant method to send money home.”

Wallet Growth in a Cash-dominated Economy: The Road Ahead

The market for digital wallets is still in its infancy and is expected to reach $90 billion by 2017. The RBI data on payment indicators suggest the mobile wallet transactions are growing almost by 50 per cent month-on-month.

Many players, including eCommerce players and banks are cashing in on virtual wallets. FreeCharge, a digital platform for recharge and utility payments, with a volume of over 200 million transactions annually, announced the launch of FreeCharge Digital Wallet recently. “With the launch of the FreeCharge Digital Wallet, we are all set to transform the way people make payments,” commented Kunal Shah, CEO and Co-founder, FreeCharge.

Indian users are slowly but surely warming up to the opportunities offered by the wallet players in the country. A lot of action can be expected in the coming months, right from merchant acquisitions, to e-tailers’ growing interest (Snapdeal’s FreeCharge launching wallet), to big conglomerates announcing arrival (Kishore Biyani’s Future Group’s wallet in the pipeline); and banks entering the space (HDFC, Axis, SBI etc). With a pent-up traction and mammoth funding taking place, the Indian mobile wallet story is just in its introduction phase.          

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