August 5, 2015
There are an estimated 58 million semi closed mobile wallet users in India of the 950 million mobile phone users in India. Semi closed wallets are those which have received m-wallet license from RBI. The volume and value of transactions is growing exponentially. RBI says that since January till April 2015, more than 160 million wallet transactions have taken place which has resulted in transactions worth $ 0.6 billion. In 2014, it was $ 0.9 billion (Jan – Dec). The level of penetration is significantly low but the competition is high. With an increasing level of installed base of smartphones in the country and rising interest level among users, it appears that mobile payments will take off very soon.
There are more than 20+ mobile wallet startups in India apart from wallets from established players. Some of the players are listed below:
Till 2014, mobile wallets in India were mainly used for bill payments, recharges and remittances but now recently there has been an uptake in the merchant payment segment (retailers). Multiple retailers (especially online merchants) have started accepting wallet payments and this is where things become interesting.
The perception that is building up currently about the mobile wallets is that they are a source of getting heavy discounts across on-demand delivery apps and e-commerce sites. Let me illustrate it with few examples:
- There is an interesting thing about ordering food through the Tiny Owl App. You can get 100% Cashback on food and 50% Additional Paytm Cash. So some users had reported that they ate the food without really paying anything and got some extra cash back.
- Domino’s offers heavy discounts in India. It is normally around 20%. If you pay through the MobiKwik wallet, you get an additional 15% off.
With more stored-value solutions arriving in the market, the wallet industry is set for fierce competition. Companies will become busy in more merchant acquisitions and at the same time, merchants will also swing from one company to another, ditching the one who is less lucrative in the process.
One such case that has recently happened is the partnership of Uber and Zaakpay (group company of MobiKwik). Uber now accepts debit card and credit card payments in partnership with Zaakpay.
Previously in December 2014, Uber was forced to stop accepting credit and debit cards because it did not adhere to the two-factor authentication which was made mandatory by RBI. After that, most of the payments were done through cash and through Paytm Wallet. Slowly, Uber—which offers around 200,000 daily rides—emerged as one of the largest clients for Paytm.
In July 2015, Uber announced that it has partnered with Zaakpay and will be relaunching credit card payments. Just one month after the initial announcement, the company has now announced that Uber taxi drivers will also accept debit card payments in partnership with Zaakpay. Now, the debit card is the most preferred way of payments in India by far. Almost all users carry debit cards and the volume of debit cards in circulation is 25 times more than that of credit cards. This essentially means that Uber has created choices for customers outside of Paytm on its platform. Although the company said that payments through Paytm Wallet will continue, in a country where debit cards dominate, it will now be hard for Paytm to get the same volume of transactions. Paytm Wallet is one of the prominent mobile wallet players in India and has been growing really well. In next few months we will surely witness some more deals as the wallet war in India intensifies. So, stay tuned!