A year after demonetisation, cashless transactions have gone up substantially, mostly because of mobile wallets. According to a research by Counterpoint Technology Market Research, payments using mobile wallets have “doubled in the one-year post demonetisation, clocking $1 billion per month in 2017”, and is likely to grow faster than China due to the rapid smartphone penetration post the launch of low-cost 4G services.
The transactions using mobile wallet is likely to surpass 3.1 billion transactions worth more than US$13.0 billion in 2017, which was just 1.6 billion within the Indian digital financial system in 2016. The spike in mobile wallet transactions was due to initiatives that were taken by both the Narendra Modi government and the private players.
The government launched BHIM-Aadhaar platform for merchants to facilitate digital payments. The BHIM app enables every Indian citizen to pay digitally using their biometric data like their thumb imprint on a merchants’ biometric-enabled device which could be smartphone having a biometric reader. Moreover, promotions and new initiatives by mobile wallet companies also made people inclined towards cashless payments through mobile wallets, the research authored by Pavel Naiya, an analyst at Counterpoint Technology Market Research said.
While mobile wallet payments have doubled in last one year, the use of debit and credit cards have been limited due to the lack of available infrastructure in non-urban areas. “With the increase in smartphone penetration as well mobile broadband connectivity, India will largely skip the use of credit and debit cards and move instead to an environment where mobile payments become the largest form of non-cash payments,” the research said.
While cultural and linguistic diversity, as well as low penetration of mobile broadband services, pose a problem in going fully-cashless, smartphone penetration is rapidly changing in India after 4G services were launched, the research added.
India’s paradigm shift towards mobile wallet transactions is expected to quicker than China because of three reasons: Digital India initiatives, an increase of 4G data network availability, and aggressive mobile wallet strategy, the research said. “After the launch of Reliance Jio in March 2016, the usage of internet has increased manifold. Free data offers during the initial launch period as well as follow-up offering of 4G data at very low costs, further pushed the adoption of digital transactions through mobile phones,” the research said.