The jackpot that mobile wallets hit post November 8 is, by no means, time for them to be lulled into complacency. An external event triggering steep growth can only last for so long and the ground work for a changed digital payment dynamic has only just begun
A historic moment for India, the evening of November 8, 2016 had the Prime Minister declaring the then prevalent Rs 500 and Rs 1,000 notes as invalid currency. Not surprisingly, the aftermath of demonetisation was confusion and panic for the general populace. Even as the nation tried to make sense of it all, there was a select bunch of businesses that saw opportunity hidden in this mayhem.
Yes, mobile wallet players seem to have been the biggest gainers of the demonetisation event. The ridiculous sounding growth figures, user base numbers, transaction rates over a span of four months since, is testament of how atypical demonetisation as an event is. Players such as Paytm, MobiKwik and FreeCharge wasted no time in amplifying their communication to the audience, offering themselves up as the solution to the cashless woes. Especially Paytm, which was out with full page ads in leading newspapers the next day.
Reserve Bank of India provides that the volume of PPI (Prepaid Payment Instruments) transactions went from 126.9 million in October 2016 to 169.03 million in November 2016. The volume soared to 269.01 million for December 2016. PPI here is inclusive of mobile wallets, PPI cards and paper vouchers. Mobile wallets transactions in particular were at 99.57 million in volume in October 2016, which rose to 138.09 million in November 2016 and finally reached 213.11 million in December 2016. This data pertains to Mumbai, New Delhi and Chennai. But is this windfall sustainable? Now that the waters have receded somewhat, how are players gearing up to keep up the momentum?
Blessing in disguise
Wallets had their jobs cut out in the early days of demonetisation. They had to reach audiences beyond what they had acquired till then and make a case for their offerings while trying to be top of mind as well. One of the grouses of the public was about not having cash for everyday use; this included everything from milk purchases to paying utility bills to grocery shopping. This is where wallets provided themselves as payment facilitators.
FreeCharge in partnership with Snapdeal launched Wallet on Delivery within 48 hours of demonetisation. Customers could simply pay on their wallet at the point of delivery. Another feature through a tie-up with Snapdeal was Change via FreeCharge, where the wallet could be used not only for payments, but also to receive change after paying through currency notes. Freecharge was apparently signing up a merchant every 30 seconds with 60% of the new merchants seeing the first payment happen within the first hour of signing up.
MobiKwik’s CBO, Vineet Singh, considers demonetisation as a force multiplier. The event coupled with a push from the brand has them ‘sitting pretty’ today. “Our user base has increased from 30 million to almost 60 million now in three months,” he says. “From January to February 2017, our on-ground merchants have increased from 5,000 a day to 10,000 a day.” The brand launched MobiKwik Lite to cater to areas or consumers with slow data connectivity. On the communication front, SMS and push notifications got them the most traction.
On the other hand, consider bank wallets. State Bank of India ran the Cash ki aadat badlo campaign to support its digital wallet offering, State Bank Buddy, while HDFC’s Chiller app, a wallet launched in 2015, saw steep growth post demonetisation too. Even the NPCI-driven BHIM app was much talked about.
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Piyush Singh, MD — financial services, Accenture, points that a new normal has been created. “Volumes went from a particular level to a peak level during demonetisation, which was driven by compulsion,” he says. “Currently, the pace of growth is receding, but one that is still higher than what mobile wallets would have had before November 8.”
The issue now, Singh says, is not about whether wallets will make it or whether UPI, Aadhaar-based payments (challenging mobile wallets head on) will have the last laugh. It needs to be about whether a feasible, practical digital payment solution is developed now that the ‘cashless’ frenzy has melted down. The point that will decide the future of wallets will be based on whether they can develop solutions specific to say, merchants, and then create a personalised solution for a certain kind of merchant. A convenient payment mechanism coupled with a strong physical distribution arm will give wallets meaningful sustainability, Singh adds.
Maintaining consumer interest in a brand is now both a challenge and an opportunity. A Brickworks Media survey that takes into account 13,611 respondents across eight metro cities, found that the active usage of wallets during Nov-Dec was 64.7%. In Jan-Feb, that has dropped down to 31.8%. The daily use of wallets during Nov-Dec was 39.8% and has dropped to 0.2% during Jan-Feb. Apart from the cash flow situation normalising, 73.7% of respondents have listed not being given cashbacks or discounts as reasons for choosing to not use a wallet.
Khushroo Panthaky, director, Grant Thornton Advisory, notes that around 30% of the total online transactions globally are conducted through m-wallets. The way to sustainable success for wallets going further is innovation, both on the tech platform and the products they provide. “Innovative products, secured technology and ease in understanding the operational part of the mode of payment are the critical factors to accelerate growth in this line of business,” says Panthaky. “Cashbacks and rewards offered could be one of the prominent distinguishing factors.”