Mobile money first tried to make its presence felt in 2011-2012. Although it was still at a nascent stage, and at the helm of growing mobile penetration, it was more about what would or wouldn’t work for India. A few players helped stir in the interest.
Since then, we’ve seen the concept of mobile money follow a rather bumpy ride, falling in and out of interest over these years. Today, just in about four to five years, the dimensions seem to be changing, a lot of water has flown and mobile money now looks more promising than ever before. We’ve spoken to some of the prominent players in the mobile wallet space to find out more.
Mobile wallets and India
Be it mobile payment options or simply acceptability by merchants and consumers, the graph shows exponential rise. There is wider acceptability today. Mobile wallets are still nascent, but the pace at which they are growing is phenomenal. “We’ve seen exponential growth in wallets and a couple of months ago, we crossed the 100 million wallet mark. We witness about 70-75 million transactions on the Paytm platform, and one-third are via mobile wallet,” Nitin Mishra, VP, Products, Paytm tells us.
The way we use mobile phones has changed tremendously and probably after a few hiccups, we’re finally getting comfortable making payments via mobile phones. With the comfort level set in, a phone transforming into a means of payment is only natural, and it’ll be a gradual process.
This has led to many more players entering the mobile wallet business. Talking about the FreeCharge wallet that was launched recently, Govind Rajan, CSO, Snapdeal and COO, FreeCharge tells us, “Within just 1 week of customer roll out, the FreeCharge wallet crossed the milestone of 1 million users and we see the numbers only growing by the day.”
“Citrus Wallet is growing 30-35% on monthly basis for last 6 months. We process over 10 million transactions on monthly basis. There is significant increase in number of people transacting using mobile phones. I expect this number to be around 70-75% in next couple of years,” said Jitendra Gupta, Founder and Managing Director, Citrus Pay
An IDC report earlier this year predicted that worldwide mobile payments will account for $1 trillion USD in value in 2017, up 124% from the less than $500 billion USD expected in 2015. It is Asia/Pacific markets that will contribute to this growth greatly as mobile commerce (or mCommerce) transactions with remote payments take off across the region, the report said further.
In India, we are seeing a similar wave, and the number will be further driven by the number of initiatives that have already started sprouting and also the mCommerce maturity level. Afterall, biggies like Flipkart went app-only and Snapdeal revealed five million app downloads just during this year’s Diwali sale.
Mastercard’s online survey earlier in March revealed that smartphone shoppers in India have been on the rise, with purchases through mobile nearly doubling over the past two years. Mobile wallets are listed among the initiatives that have enriched the Indian shopping experience.
“Mobile wallets have already surpassed credit cards in terms of the number of users. Over 90% of transactions on FreeCharge are already from mobile! We are witnessing a drastic shift in consumer behaviour and believe that the digital wallet will transform not just payments, but commerce by connecting consumers and merchants in one click,” adds Rajan.
What has led to the change
There are many factors that have brought about the gradual change. One of the most important and obvious change is the massive mobile and Internet penetration. Siddharth Arora, CEO, ePaisa tell us that compared to the 240 million bank accounts in the country, India has more than 500 million mobile phone users and 90% of these phones are capable of handling financial transactions.
Mobile recharges and easy payment of bills are easily at the forefront when it comes to driving digital wallet numbers. “In 2014-15, major application areas that drove the country’s mobile wallet market included money transfer, mobile recharge and bill payments, utility applications. These applications are being predominantly used by mobile wallet users based in Tier-I cities such as Delhi, Mumbai, Bengaluru and Chennai,” says Suresh Sethi, Business Head, M-Pesa, Vodafone India.
According to Nitin Mishra of Paytm, the growth can be attributed to two factors – convenience and security. Firstly, paying online using a credit/debit card is a longer procedure involving 16 digit number, CVV, OTP and so on. Mobile wallets simplify the process with one-click transfers. Afterall, isn’t it simpler to use your mobile money to render exact change instead of scuffling over a few 10s or 100s when you are already running late? Yes, it is more about convenience, at least to a certain sect of people. That’s the reason why Paytm, Citrus Pay and OlaMoney are working wonderfully when it comes to payments for a taxi ride.
“Radio cabs definitely played a key role in driving the adoption. Change was a big issue in cab segment and auto debit facility in wallets solved that problem wherein consumer doesn’t need to haggle with driver for change,” adds Citrus Pay’s Gupta.
Talking about security, Mishra explains that one can decide how much money they want in the wallet. So, even if after all the security measures someone manages to still hack into an account, the said amount will be at risk rather than the complete savings account. This makes mobile money safer than your online payments using cards.
Framework and limitations
After decades taken to move from paper to plastic money, RBI has been rather quicker in making amendments to support mobile money. Most banks already have release their mobile wallets, for instance ICICI has Pockets and SBI introduced the SBI Buddy. Now, the latest announcement reveals support for money transfer between online wallets by 2016. There have been frameworks that RBI has tried to put in place, but have added limitations of any sort.
“I am personally very impressed with RBI’s thinking in driving digital transactions. They introduced second factor for banking transaction. It faced huge resistance from all quarters of industry but it proved to be boon for e-commerce industry and consumers feel more secure while transiting online,” Citrus Pay,” says Citrus Pay founder Gupta.
“RBI has created a differentiated banking licenses to address government’s financial inclusion agenda in India. Both Government and RBI recognise the distribution strength of telecom companies like Vodafone,” says Sethi.
“Regulatory frameworks are protective in nature, as consumers are more likely to adopt mobile wallet payments if they are confident that the provider most likely the mobile wallet company has taken the appropriate steps to protect their funds and confidential account information,” adds ePaisa’s Siddharth Arora.
Driving numbers for the future
Now, this is the biggest challenge. We have the initiatives in place, but driving numbers in India could come with a certain degree of difficulty.
“You need to be better for the consumer, you need to be better for the merchant – it’s important to have both perspectives. For both consumer and merchant the key question is why digital wallet is better than cash. For the consumer it needs to be faster, more secure and more rewarding, For the merchant it needs to save time and cost, and importantly give merchants new streams of revenue through world class analytics,” explains Rajan. Freecharge has begun road testing several new technologies and believes that for such an industry short term plans are more beneficial.
Gupta tells us that Citrus pay is focusing on social commerce payments heavily wherein any small seller or consumer will be able to collect payment through social channels and also market its products using Citrus platform.
Vodafone is looking to take mobile wallets to remote places via its ‘M-pesa’ agents. “With over 95,000 ‘M-Pesa’ agents, we are already providing people in remote areas a convenient way to, transfer money and make payments in a safe and secure manner. We have partnered with several government bodies to run pilots for enabling direct transfer of wages/subsidies. We are grateful to the RBI for giving us the licence for setting up a payment bank,” adds Sethi.
ePaisa’s Arora says that its lower transaction rates and universal wallet acceptance of all wallets in one app will help merchants avoid cumbersome integrations and focus on selling more.
To ensure that mobile wallets don’t hit a roadblock, Paytm is trying to reach out to those without access to financial institutions. Now, convenience can be different for different people and reaching out all sects of society is necessary to add to the numbers. Mishra tells us that Paytm is looking to cater to all sides. “A user who doesn’t fall into any financial fold can simply walk into a kirana store and ask the storekeeper to recharge and top-up the wallet. We have 10,000 such stores across the country to help people and the number will grow to 50,000 over the next few months”, he explains.
While recharges, bill payments and taxi services are at the forefront, most of these players are trying to expand to other sectors too. In the next 30 to 90 days, Paytm plans to source partnership and add in some known large format retailers, brands, small retail networks, coffee shops, hotels in the offline space. In the online space, they are targeting education sector, allowing coaching class and other fee payment via mobile wallets along with insurance and travel sector.
While the above mentioned numbers may not be incredible, but they are the best we’ve seen so far. The initiatives by mobile wallet players will have to be backed by the RBI, and government initiatives such as improved infrastructure, affordable data plans, stable network connections, and more. There is also the need for awareness, which will also play a key role. If we hit the right chords, there should be no looking back for mobile wallets in India.