Demonetisation might not have gone well with the majority of the population, but digital payment companies are riding high on it. There has been a surge in volumes and value of transactions done digitally in 2016-17 and 2017-18.
According to a survey conducted by Globaldata on ‘Consumer Payments’, over 55 percent of respondents indicated that they have a mobile wallet and use it. The study further stated that the adoption of mobile wallets in India is much higher than that in the developed markets like the US and the UK, where consumers use plastic cards most of the times.
Talking about the number of transactions, the study said that the value of mobile wallet transactions in India has swelled almost 40 times from Rs 24 billion in 2013 to Rs 955 billion in 2017, and is expected to reach a mark of Rs 1 trillion in early 2018.
Commenting on the mobile wallet market growth, Ravi Sharma, Senior Analyst at GlobalData’s payment practice, said, “The growth in mobile wallet market is fueled by the government’s policies to promote electronic payments, coupled with rise in smartphone penetration, and improved telecom and payment infrastructure.”
Demonetisation in November last year led to a massive cash crunch in the country with most of the ATMs running out of new currency notes. Following this, many people switched to electronic modes of payments.
The report stated that the total value of mobile transactions grew two-and-a-half times in 2016-17 itself. GlobalData’s survey further showed that the share of cash or cheque (COD) in the ecommerce section declined by 31 percent in 2013 to 16 percent in 2017 whereas mobile wallets gained from 7 percent to 29 percent during the same period. Furthermore, the usage of cards dropped by 6 percentage points (from 38 to 32) during the same time.
Looking at the growth of digital transactions in India, companies such as Google and Amazon are already tapping in the market. Recently Google launched its payment platform Tez, which enables users to link their bank accounts with the app to pay for goods and services, online and offline both.
With Paytm dominating the Indian market, which accounted for 9.9 percent share in the total ecommerce transaction value in 2017, PayPal came in just behind the Indian giant with a 9.8 percent market share. Other Indian wallets like MobiKwik and FreeCharge accounted for 2.8 and 2.7 percent respectively.
To be in a competitive market like India, these payments providers are moving past payments and providing value added services to remain competitive. For instance, paying utility bills with Google Tez is absolutely free, or mobile-top ups, maybe entertainment tickets. A few companies like Airtel and Paytm have pivoted to banking services