Demonetization and the Digital India campaign have given the objective of a cashless India a great boost. And mobile payment apps, more commonly known as mobile wallets, have gained a large market share in this process. Paytm, Mobikwik, Freecharge are the market leaders in this domain and boast of a huge customer base and remarkable statistics. Today, Paytm alone has more than 200 million customers in India and intends to increase the numbers with time. But there are certain barriers that stand in the way of the growth of the mobile wallets.
There is a huge potential for all the cashless payment methods in India. However, plastic money like credit cards and debit cards still haven't garnered that kind of response from the masses in the country. People prefer the payment methods that can be accessed through their smartphones much more. And mobile payment apps have capitalised on this market segment. They offer attractive cashbacks, discount coupons on every transaction, a business strategy that has helped them in building a loyal customer base. But this particular strategy has also resulted in losses for these mobile wallets. Paytm reported a loss of Rs. 1,651 crores in the last fiscal year.
Another drawback of the mobile payment apps is that they are not interoperable; you can transfer funds from a Paytm account to another paytm account but not from one Paytm account to a Mobikwik account. This limits the scope of transactions on part of the user. And now with the advent of UPI, mobile wallets are looking at very stiff competition. National Payments Corporation of India (NPCI) has developed the UPI technology that facilitates direct transfer of funds from one bank account to another with the help of a mobile app. UPI looks set to replace NEFT, RTGS and IMPS transactions and the mobile wallets should think of something innovative to survive and they must do that quickly. The digital user is busy and on the move. Thus he/she always looks for ways to minimize effort. UPI can attend to the digital user's banking needs in lesser number of steps than the mobile wallets. Today, if you try to make a payment to Uber through Paytm, first you have to load your Paytm wallet with cash from the bank account and then you can pay for your cab ride from the wallet. UPI lets you access your bank account and make payments from it directly, without the involvement of any third party.
Many banks have come up with their own UPI apps and they are independent of the banks meaning that even if you have an account in SBI, you can use the UPI app of Axis Bank. But it's not all grim for the e-wallets. The RBI has recently said that it would allow interoperability between the different wallets and that would definitely widen their reach.
There is a huge potential for all the cashless payment methods in India. However, plastic money like credit cards and debit cards still haven't garnered that kind of response from the masses in the country. People prefer the payment methods that can be accessed through their smartphones much more. And mobile payment apps have capitalised on this market segment. They offer attractive cashbacks, discount coupons on every transaction, a business strategy that has helped them in building a loyal customer base. But this particular strategy has also resulted in losses for these mobile wallets. Paytm reported a loss of Rs. 1,651 crores in the last fiscal year.
Another drawback of the mobile payment apps is that they are not interoperable; you can transfer funds from a Paytm account to another paytm account but not from one Paytm account to a Mobikwik account. This limits the scope of transactions on part of the user. And now with the advent of UPI, mobile wallets are looking at very stiff competition. National Payments Corporation of India (NPCI) has developed the UPI technology that facilitates direct transfer of funds from one bank account to another with the help of a mobile app. UPI looks set to replace NEFT, RTGS and IMPS transactions and the mobile wallets should think of something innovative to survive and they must do that quickly. The digital user is busy and on the move. Thus he/she always looks for ways to minimize effort. UPI can attend to the digital user's banking needs in lesser number of steps than the mobile wallets. Today, if you try to make a payment to Uber through Paytm, first you have to load your Paytm wallet with cash from the bank account and then you can pay for your cab ride from the wallet. UPI lets you access your bank account and make payments from it directly, without the involvement of any third party.
Many banks have come up with their own UPI apps and they are independent of the banks meaning that even if you have an account in SBI, you can use the UPI app of Axis Bank. But it's not all grim for the e-wallets. The RBI has recently said that it would allow interoperability between the different wallets and that would definitely widen their reach.
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