In recent times, India has witnessed an exponential growth in the area of digital payments. Mobile payments form a meagre part of the total digital payments industry. However, with massive smartphone user base of 250 million and increasing mobile internet proliferation, mobile payments are estimated to be over US$ 4 billion and growing exponentially. Also government flagship initiatives such as Digital India and financial inclusion of significant number of unbanked families (more than 145 million) are expected to pave way for growth in mobile wallet providers that will eventually emerge as mini banking institutions.
3. Market Context
In recent times, India has witnessed an exponential growth in the area of digital
payments. Mobile payments form a meagre part of the total digital payments industry.
However, with massive smartphone user base of 250 million and increasing mobile
internet proliferation, mobile payments are estimated to be over US$ 4 billion and
growing exponentially. Also government flagship initiatives such as Digital India and
financial inclusion of significant number of unbanked families (more than 145 million)
are expected to pave way for growth in mobile wallet providers that will eventually
emerge as mini banking institutions.
4. Market Context
Presently, the mobile wallet provides services comprise money transfer and additional
services related to banking transactions. Other value added services provided by the
mobile wallets include shopping, ticketing, recharging, and bill payments.
Furthermore, to increase digital wallet penetration and strengthen offline wallet push,
mobile wallets service providers are competing fiercely, which is driving innovation.
Mobile wallet companies are aggressively targeting the huge and untapped offline
payments market to let consumer completely use mobile/ digital wallets to make
payments.
5. Strategic Insight – Changing Business Model
Recently, Mobikwik integrated a feature 'Explore Nearby' to its app to enable discovery
of neighborhood stores, restaurants, and cafes. that accept wallet payments. The
launch of this map-based feature is intended to help consumers locate neighborhood
stores where cashless payments are accepted. It also identifies the nearest cash
loading points to top up the wallet balance. The feature marks a critical point in the
fast evolving mobile-wallet space and intends to gear India to a more cashless
environment. Though the GPS based interface is the first execution of online-to-offline
(O2O) strategy among Indian mobile wallet firms, the strategy is not new and is
aggressively followed by RBI approved Paytm.
6. Strategic Insight – Changing Business Model
Paytm, with its offline models that comprise QR codes, one-time password and even
sound-based payment, has projected to book over 4 million merchants by end of year
2016. The company recently entered into partnership with multiplexes PVR and INOX
to use movie tickets as an anchor to expand its offline reach. The recent partnership
between Paytm and multiplexes will let users to pay for their tickets as well as for food
and other value-added services using Paytm wallet. Previously, Alibaba backed Paytm
to drive cashless transactions in the offline market and encourage merchants to
accept digital payments, also removed merchant fees for all transactions on its
platform.
7. Strategic Insight – Changing Business Model
Believing in the offline push strategy, earlier this year Freecharge too inked a
partnership with mobile payments company Ezetap to enable its wallet users to make
offline payments at Ezetap's point-of-sale terminals. The tie up was aimed at transiting
beyond organized retail points to the large unorganized retail sector which executes
high volume of small-ticket cash based transactions.
8. Strategic Insight – Changing Business Model
In-app mobile wallets landscape has evolved from earlier exclusive tie-ups with one
merchant to slowly gearing up for universal acceptance at brick-and-mortar
neighborhood outlets. In India, less than 7% of the transactions take place through the
digital channel. The players in the mobile wallet sector are all putting structure in place
to gain market share by increasing their reach to offline stores through either
individually tying up with multiple physical brands or with tie ups to other financial
technology companies that have access to a set number of merchants.
9. To Know More
To know more and gain deeper understanding of how
mobile payment industry is shaping up in India, click here.