Of Mobile Wallets And Deep Pockets : An Industry Overview

With the Modi led Government, ‘digital’ has been abuzz across all the corners of the country. In this entire process of making everything digital, we may have missed the significance of the word and the process of ‘digital transactions’.

In India overall time spent on mobile payment apps has increased by nearly 1.5x, with users spending an hour and a half on mobile payment apps every month.

Interestingly, mobile payment apps are 1.2x more popular among men than women and men are 2x more engaged with these apps than women.

What’s Driving Mobile Wallets?

According to U.K-based Juniper Research, more than one in three mobile wallets and over 50% in developed markets, will feature contactless payment by 2018. With the proliferation of mobile payment apps, the Indian smartphone user has increasingly begun to go cashless. The popularity of such apps has risen from over one-in-five active users last year to over one in every two users this year.

With a small targeted market right now for digital transactions and many players plunging into it with various business models, it has only asserted on the ample opportunities and scope lying ahead in the future.

An analysis of real time metered smartphone usage data with Nielsen Informate Mobile Insights reveals how Indian consumers are using mobile payment apps:


Alibaba backed Paytm leads the market followed by Freecharge which is owned by Snapdeal.

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According to data with Nielsen Informate Mobile Insights, the most popular mobile payment apps in terms of time spent, are those that provide services over and above pure payment like mobile recharging, ability to book movie tickets, shopping and so on.

Current Scenario

Nitin Misra
Nitin Misra

Highlighting the existing scenario, Nitin Misra, VP of Product, Paytm, says m-wallet transactions have crossed the mobile banking transactions which shows the growing preference.

“Paytm with 120mn wallets has seen tremendous growth in the past 12 months. We currently clock around 60-65 million transactions monthly. Interestingly, 80% of the transactions are from mobile devices and 50-55% transactions are from metros while the rest is from non-metros,” he added.

“But only 5% of transactions is online, 95% is still in cash. And that is our biggest competitor.”

Paytm plans to increase its PoS presence by 2-3X by end of this year.

Freecharge’s Chief Operating Officer, Govind Rajan, said,  “The acquisition by Snapdeal led us to focus on wallet business. And as we already had 6-7 million recharge users and an overall user base of more that 20 million, expanding to wallet was easy.”

Govind Freecharge
Govind Rajan

“In wallet business you need to have partnerships and in the next 4 months we will have a significant reach and we plan to complete 7 million transactions by end of this year.”

Is Cashback Sustainable?

Oxigen believes that unlike other players in market, where cashback is a massive hit, they believe in bringing loyalty to the brand.

Sunil Kulkarni
Sunil Kulkarni

“Cash back in not  a way to do transactions. Industry is going through distortion where cashback is the reason for having wallet, which is wrong reason. Cashback is not sustainable,” says, Sunil Kulkarni, MD, Oxigen.

Industry experts say the key to rapid acceleration of mobile payment app adoption is to make the payment process simple for the consumer. The less information the consumer has to manually enter, the better the adoption rate.

According to Nitin Gupta, CEO, PayU, “Businesses are built on Fundamentals. If your business is not based on Fundamentals, it won’t work. Working on cashback and discounting is delaying your problem, because you will need to solve the problem of why a user is using a wallet. Today, uber has forced users to use Paytm, if tomorrow they bring any change then it won’t work.”

Nitin Gupta
Nitin Gupta

He further added, “We have three value props: 1) Convenience, 2) Reliability: If any “gadbad”, reliability is 100% 3) Rewards:  Sustainable for me. How long will Cashback system?”

“In POS systems we are bringing a game changing stuff and we’ll give something only in April. POS is under-penetrated, cannot afford machines. It’s a different problem to solve,” he added. 

Ruling Trends

bipin Singh
Bipin Preet Singh

Bipin Preet Singh, CEO and co founder of MobiKwik, commenting on the average Ticket size for the wallet payment,said, “In the last 3 months, the average spend on MobiKwik has grown from Rs 500 to around Rs 1000. Currently most wallets have a monthly transaction limit of Rs 10,000. But with the introduction of KYC norms, many users are now increasing their wallet limit to Rs 100,000 and starting to make higher spends every month.”

Highlighting the drawback of cashback model, he said, “Since we are in the business of money and give away a lot of incentives in the form of cashbacks, we do come across users who try to game the system. In the past, we have seen users creating several accounts on our system to claim cashbacks multiple times. We introduced card checks and device id checks as a counter measure and it worked.”

Ashutosh Udio
Ashutosh Upadhyay

Social Perspective

Ashutosh Upadhyay from Udio which in Croatia means ‘share’, believes that other than commercial transactions, a wallet should also address user behavior around peer-to-peer transactions where one needs to share the bill or request or send the money to someone.

Differentiating Udio’s business model, he says, “If user chooses wallet over your credit card only because of cashback, you have clearly lost the game. Currently in the wallet marketplace, the consumers are being driven only by cashback and not experience but we clearly want to avoid the routes of heavy cashbacks.”

Our Take

With different perspectives and different business models, it will be interesting to see who survives the competition in the consolidation phase. The problem will crop up when the venture capitalist fundings starts drying and companies will need to sustain themselves and turn to profits.

Hope it grows beyond just a nutshell experience and offers a great personal experience. For now just lets order food, watch movie, hail taxis and get a lot of cashbacks till they work!

[By Sanghamitra and Prabhakaran]

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