Cab operators, e-commerce firms work on own wallets

After Flipkart brought its own virtual wallet in FX Mart to the party, taxi aggregators, Uber and Ola, too, hinted at doing the same. Analysts say it may be how the big e-commerce companies start to function.

"I can see why most of the bigger players (such as Flipkart and Amazon) are going for their own wallets. It not only reduces the burden of the charge they have to pay, but more importantly, preserves the data that the company receives from the customer," says Pinakiranjan Mishra, partner and sector leader, retail and consumer products practice, Ernst & Young. This data provides the company with a consumer's spending pattern, which will help it to design focused marketing offers. "If someone puts in Rs 5,000 in their wallet and spends Rs 4,000, the company knows that the other Rs 1,000 will be spent sooner rather than later," he says.

Uber, which has a long-standing tie up with Paytm, may be severing ties with the mobile payment platform and did not comment on the development. Flipkart reportedly paid over Rs 40 crore for a majority stake in the start-up, which holds a prepaid wallet licence.

Mishra says this, however, may not mean that the likes of Paytm will lose market share. "The market in India is large and it will continue to grow. Also, the smaller players may prefer to have a third-party wallet," Mishra says.

He, however, says speciality websites should go against the "closed-loop" virtual wallet acquisition route. "The consumer will not want to tie himself down to a fashion website, for example, as that wallet cannot be used anywhere else," Mishra adds.

"The technology is fairly easy to develop and can be implanted easily. But these companies have enough to buy up others as well," says Arvind Singhal, chariman, Technopak.

Analysts say companies should tread with caution, as customers will want only a certain number of wallets. "Companies may start with a closed-loop wallet, and then, depending on how it takes off, make it open-loop, which means making it available to other merchants as well," adds Singhal.