Various estimates today suggest that there are just under a billion cellphone connections in India, and every month, there is an addition of around six million new cellphones in usage. Cellphone users are swiftly switching to smartphones with almost 65 per cent of all new Internet users in India experiencing their first surfing activity through their smartphones.The smartphone has also become the preferred medium for money transactions in tandem with its increased usage and the convenience it provides on the go. So tremendous has been its adoption that the mobile wallet market in India is expected to reach US USD 6.6 billion by 2020 as per the India Mobile Wallet Market Forecast and Opportunities, 2020.
Catalysts driving mobile wallet adoption
While the sudden growth in the digital payments landscape in India has been driven to a great extent by the increased smartphone penetration, one cannot discount the catalytic effect other factors such as government initiatives, improved infrastructure and enhanced services have had on the industry. Telecom networks are now offering 3G and 4G services across more geographies at extremely affordable prices, giving a tangible boost to e-commerce businesses.The fact that nearly 50 per cent of Indian smartphone users belong to the 18-30 years demographic has also led to a higher growth curve for digital payments. Among the early adopters in any segment, these individuals were pivotal to the rise of e-commerce in India and are currently playing a similar role for the digital payments industry.
Stimulated by these factors, more than 40 per cent of e-commerce transactions started happening via mobile phones in India with more than 52 per cent transactions through digital payments. The country is surely moving towards a cashless economy: IMPS transactions have overtaken money order, debit and credit cards in just four years, both in terms of volume and value. Moreover, the government’s push for Digital India and financial inclusion has driven mobile wallet adoption in the rural and semi-urban areas by extending financial services to the unbanked population.
Evolving features with fluctuating demands and trends
What also helps the case of mobile wallets as the foundation stone of a future cashless economy is the dynamic evolution it has undergone to meet the changing requirement of the industry. Initially, starting with phone recharges, mobile wallets then extended their services to DTH recharges and bill payments. Today, the burgeoning mobile wallet segment has e-commerce, couponing/cashback and financial inclusion services firmly secured in its back pocket. Money transfer, mobile recharge, bill payments and utility applications were some of the major areas that saw highest mobile wallet utilisation in the country during the year 2014-2015, and has grown by 110 per cent since last year particularly by mobile wallet users based in Tier-I cities such as Delhi, Mumbai, Bengaluru and Chennai.
What is more, mobile wallet companies are coming up with newer and more innovative ways to engage customers and drive consumer behaviour towards a cashless form of transaction.
At present, with a vast majority of the population spending a lot of time on mobile apps and new audience portals like messaging and social media apps, the mobile wallet will see a major transformation by including a social, peer-to-peer dimension to its services. Social gifting is set to become a popular trend driven by the tech-savvy young consumer base which will metamorphose money transfer through mobile wallet into a socially meaningful gesture earning immense goodwill. There is a lot of scope for the mobile wallet to develop into a means to easing financial transactions, aiding emergency fund transfers or proving handy on social outings.
Digital money transfer is being adopted globally from San Francisco to Shanghai with a lot of enthusiasm. Users are now sending and accepting donations, tips, gifts, payments and rewards on a dozen social media platforms too. The future mobile wallets, in order to reach out to their customers, will be required to ‘borrow’ mobile moments from such platforms with huge engagement. In the coming years, mobile wallets will transform into one of these platforms.
Future scope and impact of mobile wallets
This brings us to the future evolution of mobile wallets. Based on current developments, it is safe to say that mobile wallets will soon be a self-reliant ubiquitous ecosystem. In the near future, mobile wallets will be used to engage with the customer by the marketers and digital businesses. With the addition of the value-added services that go beyond just payment, experts believe that mobile wallets will become a new marketing channel.
One of the best examples of this conversion is the much-talked-about app of a leading coffee chain often referred to as a mobile payment success story. It is an integrated app, where the payment feature steps back to make space for various mobile engagement activities on the platform. However, the consumer still is not allowed to manage digitised valuables such as offers, coupons, loyalty rewards, etc from multiple brands while enabling payment transactions and that is something he/she is definitely looking for. Soon, if not already, we will see mobile wallets take off significantly to pivot into a new marketing channel where the online and offline marketing efforts will be merged together. Instead of replacing merchants’ own integrated apps, mobile wallets will complement them and offer more reach to engage beyond apps and loyal brand enthusiasts.
Going ahead, mobile wallets won’t just be about mobile payments; they would become one of the major contributors of a seamless shopping experience for the customers. Simply offering faster and more-secure payments would no longer be good enough; the industry players will have to counter the real pain points such as giving consumers the ability to see what’s on stored value cards at any moment in time, access loyalty points, or automatically receive digital copies of payment receipts.
Irrespective of the market status of these mobile wallets, marketers should take advantage of the emerging opportunities to create a borrowed presence on their customers’ mobile devices. The marketers will be seen developing integrated mobile wallet apps, wherein they could add value beyond payments. Marketing leaders must develop content they want their customers to save and manage on mobile wallets. They will benefit from mobile wallets if they tie together loyalty programmes, coupons, product discovery, gift cards and promotions to create powerful and new brand experiences in the mobile moments of their customers.
The mobile wallet has exhibited enough impact to prove its potential to go beyond payments. One of the best examples is booking a movie or a concert ticket on the BookMyShow app. Vouchers pushed into a user’s wallet by brands or other users can be used to book bulk tickets and split bills via the same wallet. The user could also use features like geo-tag to notify friends; as well as gift each other on social occasions. In a nutshell, the mobile wallet certainly is going beyond just payments and pivoting into a path-breaking social experience.
About the author:
Anish Williams is the co-Founder and CEO at TranServ, a technology oriented payments company. Anish has been a Payments Business & Technology enthusiast, having spent a majority of his career building the retail payments business in India during his time at Citi and HSBC.