Daily Review: Less-Cash Payments - The Most Transformational Force in FinServ Globally

Apple Pay Cash – Another Manifest to Apple's Core Values

Entering the P2P payments game relatively late, Apple definitely makes the right moves to strengthen its closed ecosystem – the company paired its payment solution with the iMessage platform, enabling a seamless experience within an existing channel instead of pushing to download another app.

Apple Pay Cash is another manifest to Apple's core values. With this move and its execution, Apple brings into life its worship for convenience, superior user experience and a strong herding of Apple product users that comes with integration into a naturally used channel in the Apple universe.

iPhone Owners Can Now Send Money to Friends Using Apple Pay Cash

• Apple smartphones are now able to send money to people using its Apple Pay Cash feature, which was announced in June and released in iOS 11.2 Beta

• $1 is the minimum transfer amount. Funding an Apple Pay Cash account requires adding a minimum of $10. Users can't make a transaction higher than $3,000. Users cannot add more than $10,000 during a 7-day period and Apple Pay Cash accounts cannot hold a balance higher than $20,000.

Read more on Fortune.

Demonetization in India has been one of the most-discussed and significant events in the past year. In a strong push towards less-cash society, the government now witnesses an important implication – educational, and transformational for an established mindset. At the end of the day, the mindset of transformation will be the strongest force behind a widespread adoption of cashless operations.

"Demonetisation made people understand mobile payments"

"Before demonetisation, we used to see about 50 million transactions a month. A year after demonetisation, we are seeing about 200 million transactions a month, which is a growth of four times on an average number basis. In between, there was a point where we had crossed 260-270 million monthly transactions.

"But what demonetization did is not about this. The mindset of the people has changed; there is a shift. We are moving away from being cash-first. Today, if you don’t have cash, and you need to pay somebody, they will simply say why don’t you Paytm me? I believe, we have become part of the mainstream and that I think is pretty incredible." – Paytm Founder & CEO Vijay Shekhar Sharma

Read more on The Hindu.

As the mindset changes, the first results of demonetization show – payments using mobile wallets almost doubled in the one-year post demonetization, clocking $1 billion per month in 2017.

Mobile leading the way: Wallet payments almost double in one year in India

• Demonetization resulted in a huge jump in mobile wallet usage immediately after the announcement. Follow-up initiatives from the government, from mobile wallet players, and new initiatives from tech giants, were responsible for maintaining the steady flow in digital payments.

• Payments using mobile wallets almost doubled in the one-year post demonetization, clocking $1 billion per month in 2017. They contributed 8.3% (1.6 billion) of the overall volume and 0.02% (US$7 billion) of the overall value of the Indian digital financial system in 2016. M-wallets are expected to surpass 3.1 billion transactions worth more than US$13 billion in 2017.

• With the increase in smartphone penetration as well mobile broadband connectivity, India will largely skip the use of credit and debit cards and move instead to an environment where mobile payments become the largest form of non-cash payments. This process will be quicker compared to other countries like China, mainly because of the following factors: a) Digital India initiatives, b) Increase of 4G data network availability, c) Aggressive mobile wallet strategy.

• Paytm is leading the mobile wallet race with a reported user base of 250 million. Paytm enjoyed the first-mover advantage with an aggressive push, marketing discounts, and cashback strategies. Mobikwik ranks second among the top mobile wallets in India, with 65 million users and 3 million daily transactions. The efforts of the top two players are largely concentrated in the top eight cities. Other players like Oxygen are focused on remittances, while players like Ezetap are concentrating on last mile payment solutions for e-commerce.

• Mobile wallets are expected to see further penetration in rural India using methods like QR code and mobile number payments.

• Going forward, the competition will be even tougher: WhatsApp is set to enter the fray by offering P2P payments through its messaging app. The adoption of Google’s Tez app might also play a significant role as the Android operating system completely dominates the Indian smartphone market.

Read more on Telecom (the Economic Times).

Big Banks Show Major P2P Payment Growth

• For banks, one of the major problems in gaining traction with P2P payments has been a fragmented market.

• PayPal has become the envy of the financial world with its P2P payments success: In its most recent quarter, P2P payments grew to $24 billion across PayPal's platforms, good for a 47% increase YoY, and P2P payments now represent 21% of PayPal's $114 billion total payment volume. Venmo also continues to show explosive growth – in PayPal's Q3, Venmo processed about $9 billion in payments, a 93% YoY increase. In its recently reported quarter, PayPal reported 1.9 billion transactions across its platforms, a 26% increase YoY.

• As banks saw consumer habits changing, they knew they would have to adapt or risk losing the next generation of consumers. Zelle was their collective solution.

• Wells Fargo CEO Tim Sloan said the bank had seen "significant growth" in both the number of P2P transactions and payment volume since launching Zelle in June. Sloan also said the company saw 46% growth YoY in P2P payments.

• "In this quarter, Zelle came forward, the latest offering we have in (the) mobile area. ... [O]ur volumes through Zelle this quarter were $4 billion in the third quarter. We processed nearly 14 million transactions, and the growth continues. We recently processed $0.5 billion in a single week. Our customers are using Zelle, and we look forward to further growth in that area," said Brian Moynihan, CEO at Bank of America.

Read more on The Motley Fool.

Oh, and Facebook will allow people outside of the US to send money using its messenger app for the first time as it offers mobile payments in the UK. While in the US, Facebook certainly has some competition to measure up to – the UK market is a less competitive market at the moment for small-scale payments. Read more on The Hill.

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