Mobile Wallets Adoption in Indi
Introduction
I have booked Ola Cab to go to Bellandur in the morning for a hackathon. I have Rs 300/- rupees in my wallet and Rs 80/- in Ola money. My estimated bill is Rs 460/-, I don’t want to take out money from the ATM and I am already sitting in the car. I ask the driver whether he accepts PayTM instead of cash and he says ‘Yes’. In some cases, PayTM is not allowed to be used in the Ola Cabs. But today I was lucky. Luckily, we mobile wallets which has made the money transaction easier without going to banks or waiting outside the ATMs. I have used 2 mobile wallets to travel. I dont need physical money in my hands nowadays.
Mobile wallets such as PayTM, Ola Money etc. came as a boon during the month of November and December of 2016 when the entire India was struggling to get cash for daily expenses and was waiting outside banks for 4–5 hours to withdraw some money. So, let’s understand what is mobile wallet all about and how it has disrupted the traditional methods of payment.
Mobile wallet is Mobile or Virtual Money.
Product adoption curve for Mobile Wallets
The product adoption life cycle curve, also known as technology adoption life cycle curve, was first introduced in the late 1950s to describes the adoption of new product or innovation, according to the demographic and psychological characteristics of the defined adopter groups. The process of adoption over time is typically illustrated as a classical normal distribution aka “bell curve.”
In India, many people are using mobile wallets for various transactions these days. They can be grouped into Innovators and Early Adopters.
Innovators: These are the set of people who are using mobile wallets since it’s inception. This category of people mostly falls under the 18–30 age group. They are either the tech-savvy college grads or technology enthusiasts, living in metro cities, and are always hungry for trying new things that hit the market. These breeds form only 2.5% of the market but influence a larger section of user segment to use the product. They don’t fear to try out the beta releases of a product and plays an important role in accepting the product. They carry out their day-to-day transaction through various mobile wallet services. However, they don’t talk about the products outside their social circles and they are ready to move on quickly on anything which is more disruptive than the current products.
The younger generations often cannot access financial services as they are not old enough but are actively involved in virtual gaming transactions thats why they also adopt mobile wallets.
Early Adopters: These are set of people who are using mobile wallets after innovators. These people lie in the 18–35 age group and live mostly in metros and few tier-1 cities of India. They generally comprise 13.5% of the total users. After using the digital payment services, based on their experience, they evangelize the services everywhere. Young working professionals, students, entrepreneurs, and technology friendly folks, who are aware of the benefits of digital services, falls under this category. They started using the mobile wallet services once companies like Paytm, PayU and Mobikwik began to be popular in media, news, advertisements and peer users.
After Demonitization, early adopters have increased in India. As the economy is driving towards less-cash economy. Still early adopters are less.
Factors and challenges which affected rate of mobile wallet adoption
We are yet to unleash the potential of mobile money. Recent advances in handset functionality, chip and mobile network technologies, and upgrades to point-of-sale infrastructure have dramatically improved the environment for mobile money solutions, bringing together different industry groups, such as banks and operators.
However, the cross-industry nature of mobile money prompts regulators, in both the telecom and financial sectors, to confront important questions and develop a new generation of financial regulation. This leads to the emergence of new regulatory concepts of e-money and payment.
Key enablers driving the delivery of mobile money.
Comparison of Mobile Wallets with other payment methods
Net Banking has been made a lot for popular because of boom in E-commerce. E-tail companies like Flipkart and OTA like Makemytrip have made Indians use NetBanking extensively. Probably the biggest mover for NetBanking would be IRCTC alone. Every family in urban India would have at least done 1 netbanking transaction at IRCTC in a year/ family.
In comparison to this, digital wallets have not gained much ground for doing bigger size transactions of INR 2000 and above. People still prefer netbanking.
Cash has been the number one payment method since Independence in India. Demonetisation broke the back of cash, as well as the average Indian, and achieved in doing what 10 years of govt campaigns to use online payments couldn’t achieve. It is used extensively for making very small payments to all local merchants and for paying autos, busses and rickshaws. Hence carrying cash is very important at all times. Other than this, paying local groceries is still done in cash and might remain like that for a long time.
In comparison, digital wallets have not gained users trust as there are not enough merchants accepting it.
Growth hacks used
Internet connectivity:
As mentioned before, only 33% of the Indian population have access to the internet. As long as the rest of the Indians are not connected to the internet, it is difficult for the mobile wallet companies to reach out to them. Rural market is completely an untapped market as 93% of Rural India has never done a digital transaction ever.
In this regard, Jio has given a lot of boost to the Internet connectivity as per making Indian Net savvy. Jio is connecting both rural and urban India.
UPI and other digital payment options from government:
Mobile wallet companies are worried about the introduction of UPI, an initiative by National Payments Corporation of India’s (NPCI), set up with the support of the Reserve Bank of India and Indian Banks Association (IBA). Through UPI, anyone can transfer money by using minimum details. As of now, RBI has allowed only banks to become Payment Service Providers of UPI service, keeping mobile wallets out of the service despite their requests to include them. Mobile wallet companies have to come up with unique ideas to encourage consumers to use their services regularly.
Summary
The crown is slipping, and cash is losing its kingdom. Thanks to the growth of mobile technology and e-commerce, many people have been writing the obituary for banknotes and hailing the arrival of the cashless society. While there is no final farewell for hard currency in sight.
Smartphones are helping to drive this new economy, providing connectivity and processing power that is widening the market for contactless payments and digital wallets. And it’s a change that is being reinforced by the millennial generation.
