M-Wallet companies make Indian Banks rethink their strategy. M- Wallet is electronic saving account which can be used for shopping or paying using mobile handsets. Indian banks were working on promoting products such as internet banking, credit or debit cards to woo Indian customers.
This may be due to the fact that more and more Indian customers are moving towards online shopping frenzy. Smaller companies like PayTM and MobiKwik who are service providers are luring customers with easy payment option and lucrative retail offerings. One to has deposit some cash in the m-wallet and can be used for any kind of transaction whether it is purchase online, train tickets or booking movie tickets.
According to RBI data, transactions from m-wallets are growing three times to INR 8,180 crores in the last fiscal compared to previous years, correspondingly the number of transactions have risen to 255 million for the last fiscal compared to 106 million transactions for the previous year. A major factor for this growth is due to the multiplication of e-commerce transactions through smartphones added to that even telecom operators are offering cheaper and affordable internet plans to users.
Service providers like PayTM, MobiKwik, Oxigen and Citrus are encouraging customers to use this facility by tying up with the merchants and e-commerce sites. These companies offers freebies to lure the customers to use their services, however, banks may find it difficult to match these small service providers on a short term. Most of these service providers are funded by renowned PE investors.
Recently ICICI Bank, India’s largest private bank has launched their m-wallet services called Pocket. While Axis Bank has launched their m-wallet services, Yes Bank m-wallet is designed in such a way that the users can send and request money from any of his contacts in Facebook or his phone contacts.
For m-wallet service providers sustaining in ever changing and competitive market will provide a bigger challenge. Although m-wallets will reduce dependency on bank accounts, most of the players use a prepaid medium as another medium to bank deposit usage.
Even the RBI is on the lines to make easy by having simpler validation of the details for lesser ticket transactions to make more friendly and accessible to all. It needs to be seen how this new segment will flourish in coming times and provide more and more opportunity for the customers. Despite the fact, even government policy plays a key role in deciding the future. Apart from these factors, security will be a major factor for the government as well as companies to think upon.
Major giants like Google and Apple are already testing their mobile wallets in other countries and have launched them successfully. Google has launched Google Wallet and Apple has launched ApplePay in the US and The UK. Apple is mulling the ApplePay option in next few months and even Google is also thinking on the same lines.