 "Tie-ups and innovation to drive mobile wallet growth")
After the sudden high of cashless payments triggered by demonetisation of high-value currency notes a year ago, there has been a decline in mobile wallet transactions lately. For example, according to Reserve Bank of India (RBI) data, there was a three per cent dip in in the number of transactions using prepaid payment instruments, which include mobile wallets, in August (261.1 million) compared to July (270.2 million) this year. As the Indian mobile wallet market — projected by Capgemini to grow to $4.4 billion by 2020 — gets more crowded, service providers are looking at innovation and tie-ups to stay ahead of competition.
For Paytm, India’s leading mobile payments company, some of the significant product launches this year have included Paytm Inbox (a messaging platform that allows money transfer) and Paytm BHIM UPI (unified payments interface). The rationale behind the new products, says senior vice-president Deepak Abbot, is to allow users multiple payment options and enable them to transfer money seamlessly.
“We are focused on driving aggressive product innovation using our app. Most recently, we upgraded our Paytm QR scanner to read non-Paytm QR Codes generated using open standards. App security is of paramount importance to us, and we have introduced crucial security measures like fingerprint lock and app password to ensure our customers’ money is safe at all times,” he says, adding the app has also been enabled in 10 regional languages to aid customers and local shopkeepers.
While demonetisation came as a boon for Paytm, as it emerged as an enabler for millions of consumers and merchants post-November 8, 2016, Abbot asserts that once they appreciated its convenience, the number of repeat transactions per user on the platform has risen consistently even as cash was back in the system. “Paytm” has become a verb in common parlance and is considered the primary alternative to cash, which reflects the trust the company has earned, he adds.
MobiKwik has forged a string of partnerships this year. In August, BSNL went digital by launching a bespoke mobile wallet developed and issued by MobiKwik. Recently, the company has partnered with Bajaj Finserv Ltd. to develop an EMI wallet through which customers can avail of credits and loans. MobiKwik has also developed India’s first auto-load wallet for IndusInd Bank’s 10 million-plus customers.
“MobiKwik has identified partnerships as its growth strategy. They would help us realise aspirations of the masses looking for an array of financial services in a single platform,” says co-founder Upasana Taku. She adds that over 75 per cent of Mobikwik users are millennials who find value in paying digitally.
Prior to demonetisation, the number of transactions on Mobikwik stood at 30 million, which has now touched 65 million. Its frequency for active users grew by 100 per cent and gross merchandise value grew to $2 billion.
While the value of transactions on mobile wallets fell from Rs 83.5 billion in January this year to Rs 72.6 billion in August, as per RBI data, and major players like Paytm and MobiKwik have been registering losses, growth opportunities remain.
Experts suggest companies can differentiate themselves by coming up with new capabilities that are innovative and address challenges.
D D Mishra, research director, Gartner India, points out that the adoption of mobile wallets needs to be increased and the competition is with cash, not other companies. “Mobile wallets should rethink their strategies to make usage more convenient than cash. Lack of trust, lack of awareness and education, lack of Internet penetration, additional surcharge on payments, lack of bank accounts and the comfort of using cash are some of the barriers they need to overcome. Innovation and partnerships can solve some of the problems but evolving a larger ecosystem towards adoption is another thing. Hence, the scope of innovation should extend towards driving social change,” he adds.
In the payments industry, large players are showing more and more interest, as India has a lot of untapped opportunities.
“Given the size of the opportunity and the government's commitment towards digital transactions, it is but obvious that it will attract some of the large players such as Google, Amazon and Flipkart,” says Mishra, adding that the investments required should be more in order to tap those opportunities as cashless payments pick up.
MORE ON THE PLATE
• Among Paytm’s recent product launches are a messaging platform that allows money transfer and Paytm BHIM UPI
• MobiKwik has tied up with BSNL (bespoke mobile wallet), Bajaj Finserv (EMI wallet) and IndusInd Bank this year
• Experts suggest mobile wallets should rethink strategies to make usage more convenient than cash. A larger ecosystem towards adoption is critical and the scope of innovation should extend to driving social change
