In a move to push for digital payments, the Reserve Bank of India (RBI) is setting framework to allow direct money transfers between different mobile wallets. Post demonetization in November 2016, citizens of India shifted their transactions from cash to digital and mobile apps. Paytm was a popular choice among the people and the firm had processed over 7 million transactions per day during early demonetization days.
3. Market Context
In a move to push for digital payments, the Reserve Bank of India (RBI) is setting framework
to allow direct money transfers between different mobile wallets. Post demonetization in
November 2016, citizens of India shifted their transactions from cash to digital and mobile
apps. Paytm was a popular choice among the people and the firm had processed over 7
million transactions per day during early demonetization days.
4. Key Insights
Individuals are allowed to transfer up to INR20,000 per month while merchants can
transfer up to INR50,000 per month from their mobile wallets to banks. Another wallet
Chillr offers money transfer between bank accounts but currently supports only few
banks. Most of the leading banks also allow direct money transfers via their own
mobile wallets. The Government of India has launched BHIM, a UPI-based mobile
wallet, which can be used to make payments between banks and non-banks.
5. Key Insights
However, currently wallet firms are not permitted to enable users to access Unified
Payments Interface (UPI), which will allow users to transfer money from one bank
account to another. In a report submitted in December 2016, by an 11-member
committee headed by former finance minister Ratan Watal, it was recommended that
the access to payment system should be kept open so as to allow non-bank payment
service firms. In order to offer open payments infrastructure, RBI is seeking to amend
the UPI interface so as to allow mobile wallet firms to expand their offerings.
6. Key Insights
These measures to encourage digital payments and the promotion of non-bank mobile
wallets can adversely affect the payments in traditional banks. Since the underlying
money will be involved with a bank account, the increase in money transfers between
wallets is expected not to bother banks much.
7. Market Opportunity
P2P transfer market transaction value was US$ 7,681 million in 2016 and expected to
reach US$ 5,31,896 million in 2021. From 2015 to 2016, the growth rate achieved was
152.6% while expected CAGR from 2017 to 2021 is projected to be 120.6%.
8. To Know More
To know more and gain deeper understanding of
mobile payment industry in India, click here.