Mobile wallets have risen in popularity in India following the demonetization in 2016. Mobile wallets typically refers to a virtual wallet service, wherein people can transfer a certain amount of money from their bank account for use at online and offline merchants listed with the mobile wallet service provider. This mode of digital payment service is cashless, wherein people do not have to pay cash or use of their debit or credit card at offline merchants.
Mobile wallet transactions in India have increased almost 40 times over the last five years and every service provider in the world is vying to enter Indian market to seize the incredible opportunity in this industry. The mobile wallet market in India is primarily driven by the growth of e-commerce, an expanding smartphone user base, presence of payment banks and Unified Payment Interface (UPI) platforms. These apart, there are a few other factors also that are driving the growth of this market –
Regulatory changes favouring the adoption of mobile wallets – Regulations pertaining to the relaxation of KYC for small value transactions is resulting in widespread adoption of mobile wallets. Moreover, the launch of UPI has made fund transfer easier and immediate. Also, the Jan Dhan initiative of the Indian government is bringing millions under financial inclusion, and encouraging banks to increase the adoption of digital payments.
Benefits offered by online and offline stores – One of the major growth drivers for the m-wallet market in India is the significant cashbacks and discount offered by online and offline merchants for digital transactions. This is attracting customers rapidly as Indians are known for their tendencies to save. Customers are increasingly getting attracted by the coupons, discounts or cashbacks that allow them to spend less.
Convenience and ease of use – Convenience and ease of conducting digital transaction are also key to the overwhelming popularity of mobile wallets market in India. Mobile wallets have eliminated the need of carrying physical wallets while stepping out of the house. These payment method ensure more security than cards or carrying cash, especially when traveling.
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