When was the last time you stood in a queue to pay your phone bill or book an airline ticket? Chances are you paid for it online or on your phone. As high-speed mobile internet services become easier to access in urban centres and even Tier 2 cities, leather wallets may be going out of fashion – and they are being replaced by mobile wallets.
While online banking and even mobile banking has been around for a long time, mobile wallets – which hold your money digitially – have made it easier. If you have ever taken an Uber ride you know how this works: you load money on a digital wallet through your bank account and then use that stored cash to digitally pay for a myriad of services.
To understand just how big mobile wallets are becoming, consider this – Paytm,the market leader in this space, reaches just 40% of the smartphone users in India. Yet those users have deposited more than Rs 100 crore to their Paytm mobile wallets. There are over 40 mobile wallet services active in the country, with almost every bank also planning one of their own to take market share away from the likes of industry leaders Paytm and Freecharge.
This means companies are going to aggressively go after users over the next few years, giving many more options to the consumer. To achieve growth, mobile wallet companies are going offline by integrating digital services with payment-on-site terminals at grocery shops, fuel stations and even inside autorickshaws so that the users do not have to take out their wallets and look for loose currency.
Payt has even launched TV advertisements to promote its m-wallet.
However, a big threat could come from the government of India. With its soon-to-be-launched Unified Payments Interface that will integrate multiple bank accounts and cards into one, the government is keen to provide a seamless experience for making online payments. Mobile wallets are not yet part of the UPI system, according to reports.
UPI’s rollout could be another factor impacting a mobile wallet ecosystem that has already undergone huge changes in the last few years.
Data published by the Reserve Bank of India tells a story of a massive boom in both adoption and usage of mobile wallet as a mode of payment.
Over the past four years, mobile wallet transactions have jumped from Rs 10 billion of transactions in 2012-'13 to more than Rs 490 billion in the year 2015-'16. Taxi app Uber’s adoption of Paytm went some way in popularising mobile wallets among those who weren’t before using the services, and even pushed its competitor Ola to build a wallet of its own.
But it’s not just the value of transactions that is overwhelming, it’s the rate at which mobile wallets are being adopted by users. Scroll crunched the numbers put out by RBI and it turns out that the value of transactions carried out through mobile wallets have grown by a humongous 500% between 2014-'16. Meanwhile, the number of transactions carried out through m-wallets have doubled in the same time period.
By comparison, the number of debit and credit cards transactions grew by 25%-50% in the same period. On the other hand, the value of transactions done through plastic money grew by a modest 25%.
However, that is not to say that mobile wallets are going to make your debit card redundant any time soon. Even though electronic transactions make up for only about 10% of all the transactions in this cash-dominated economy, plastic money has the lion’s share of it.
For instance, debit cards saw more than 117 crore transactions during the last financial year and credit cards added another 78 crore transactions in the same period. As compared, mobile wallets managed a healthy 60 crore transactions but that’s considering the fact that many users actually use their debit/credit cards to put funds into their digital wallets.