Digital Payments in India: The Race to Capture Your Wallet Begins
Indians are becoming savvy at digital payment, and most companies are not wasting any time in setting up their wallets.
2016’s demonetisation may have kicked up the so-called Cashless India procession, but if numbers have ever given us an indication of where the future is headed, then the narrative has been set up rather nicely.
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Experts are quietly optimistic of payment companies making the best of India’s growing mobile internet population. And the fact that people won’t be allowed to do cash transaction to a greater extent should work in favour of digital payment.
Money Changing Hands
India has predominantly been a cash-obsessed nation, and when 99 percent of the economy was deprived of it, they had no option but to go digital.
The other way to understand the scope of digital payment is the number of users with mobile internet waiting to be snapped up.
And this 300 million is estimated to become 650 million by 2020, as highlighted in Google’s Digital Payment 2020 report. In addition, the Indian Fintech segment is forecast to touch $2.4 billion in 2020.
Both Amol and Pavel have similar sentiments to share, and this reflects in the way the industry is shaping up to make you a cashless consumer.
Why the Rush?
Recent reports have given us an indication that the nascent digital payment space in India is catching everyone’s eye. Literally everyone. Amazon recently got its payment license to operate its Amazon Pay service.
Paytm is already there, and they’ve diversified into a payment bank now. Telecom operators are also in for the money with Airtel and Reliance Jio all focused on this side of the business. So, why is everyone after this segment? What do they see worth investing in?
While Amol believes that retailers are now using their existing seller clout to get the same consumer to spend money on the platform, offering them a personalised and simplified solution.
These are network industries already connecting merchants to consumers in the non-financial leg of the transaction (transfer of goods from merchants to consumers). They also have access to data on consumer willingness to pay, choice, preferred modes of payments etc. It is natural for them to leverage their position to complete the second leg of transaction (payments from consumers to merchants) by designing customised solutions.Amol Kulkarni, Deputy Head, C-CIER
Some of the well-known technology firms (e-comm, radio cabs, entertainment booking) have shown keenness to offer in-house wallet solution. Snapdeal had Freecharge (till they sold to Axis in 2017), Flipkart’s got PhonePe and Amazon has Emvantage to set up Amazon Pay.
More establishments will follow the money trail in the coming months, and even years. The landscape of digital payment in India is still in its early stage, and this should work in their favour.
Easier Said Than Done
Most experts would like to see if prepaid payment brands can convert non-digital payment users, which they predict will be very difficult.
While Paytm might have made the best of the post demonetisation scamper, others like UPI or Bharat Interface of Money have yet to reach multifold users.
And Pavel has got a point. Going digital cannot be a success, until the rural parts of the country become active participants. A rural/urban split is visible among the digital payment players with most concentrated on urban consumers, forcing wallet providers to think beyond online towards offline rural ecosystem, he adds.
But that’s not the only concern. The use of digital payment (such as Mwallet) might have increased, with over 747 million transactions done via mWallet (while only 390 million via mobile banking), but the transaction value is paltry in front of mobile banking.
What Lies Ahead:
- Make payment apps for mobile with user-friendly interface
- Need to incentivise the use of prepaid instruments
- Look into the increasing number of merchants who accept digital payment
- Innovate to reach out to the non-internet user base (which is huge and untapped)
- Bundle payment options with innovative schemes, such as cashback
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