Ankita Rai, Financial Express
New Delhi, 5 July 2016
‘mobile wallet’ and you will probably think of recharges, DTH/bill
payments or at the fringes of your mind, even e-commerce sites. But
paying for a can of yoghurt at a milk-booth near your home with, say, a
Paytm? Not an idea to be scoffed at — this is a reality today. In order
to drive the next phase of revenues, the offline ecosystem poses a
world of opportunities as far as m-wallets are concerned.
Ranging from the Big Bazaars of the world to the neighbourhood
mom-and-pop stores, petrol pumps, auto rickshaws and milk-booths,
mobile wallets are available across most retail formats. Top wallet
companies are investing heavily in changing customer habits and
creating as many use cases as possible which include exclusive tie-ups
with merchants, co-promotions with brands, cashbacks and so on.
While currently a mobile wallet business typically covers fund
transfers, services related to e-commerce transactions like utility and
bill payments, ticketing, and recharges, offline commerce is expected
to drive good traction. Research firms peg the current market size of
the mobile wallet business at R350-400 crore with volumes expected to
touch R1200-1500 crore by 2020.
“Offline transactions are an important step to increase mobile payments
penetration as they offer the ability to operate even in zero/low
connectivity zones. It also speeds up the transaction processing which
is very important in rapid services like mass transport systems,” says
Kunal Pande, partner, KPMG India.
Experts say a bulk of the big market for wallets resides at the
mid-to-low-end retailers. Recruitment of offline merchants is crucial
to the viability of payment solutions, since most consumer transactions
still happen offline.
providers that want to win the game will need to focus on usages that
are frequent,” says Devangshu Dutta, CEO, Third Eyesight. So what is
the potential of the offline ecosystem as a revenue generator for
The payment industry must overcome the ‘network effect’ while fighting
customer inertia to boost adoption.
work off the network effect. Without an adequate network of both payers
and payees, the currency — or in this case the wallet — is of limited
or no value,” says Dutta. Each company has had to build a market for
itself, both in terms of consumers using mobilewallets and merchants
who would accept m-wallet payments.
Each wallet player has made significant investments in technology,
back-end infrastructure and marketing to boost the adoption of wallets
in the offline space. And rightly so, as online still constitutes only
2-3% of total commerce.
The latest Paytm Karo commercial not only reflects the adoption of
Paytm across multiple age groups, but also highlights its QR code scan
feature for easy payments to offline merchants.
While Paytm is spending R50 crore to execute this campaign, which runs
till July, its overall marketing budget for this year is R600 crore.
“There is a massive fight for the ‘real estate’ on the mobile phone. We
need to establish ourselves as a viable alternative to cash and give
more use cases to create an ecosystem,” says Shankar Nath, senior VP,
For Paytm, recharge is an anchor use case, followed by DTH electricity
bills etc. The idea now is to expand offline as that is where the
growth is. In the offline space, the traction comes from sub-thousand
rupees transactions and out of three million daily transactions on
Paytm, offline constitutes 40% according to the company. Paytm
currently has four lakh offline merchants using its platform and 125
million wallet users. The wallet can be used at petrol pumps,
educational institutes (school/college fee payments), restaurants and
large format retailers such as More.
Clearly, the payment business runs on scale with thin margins. So
frequency of transactions is the only way to profitability, even if for
small ticket sizes. Apart from Paytm, mobile wallet player Freecharge
plans to spend R2,000 crore over the next 18 months on marketing.
Freecharge’s last brand campaign Lo. Do. Khatam Karo was released in
April this year during the IPL season to cater to metros and
tier-I cities. To facilitate payments through wallets at PoS terminals
and online payment gateways, it has partnered with payment aggregators
like ePaisa and CCAvenue.
It has also forged partnerships with Shoppers Stop, McDonald’s, Café
Coffee Day, Cleartrip, RedBus and OYO, and claims to have
crossed a million transactions in February, witnessing a growth rate of
15-20% per month.
“Freecharge features such as on-the-go-pin and chat-n-pay are for
peer-to-peer transfer and person-to-merchant payment. It is meant for
merchants in the unorganised space who do not have the means to accept
the payment,” says Sudeep Tandon, chief business officer, Freecharge.
“The chat-n-pay feature is finding wide acceptance among taxi drivers,
salons and kirana stores with almost 45% of our customer base using
it.”At Freecharge, 85% of the transactions take place through the app
and 15% through desktop and web. Currently the wallet can be used to
pay at over one lakh merchants, including both online and offline
segments. About 50% transactions are from tier-I cities and rest from
tier-II and tier-III.
Or take MobiKwik, whose offline journey started about a year back with
an association with Future Group’s Big Bazaar. It has top-down strategy
for offline expansion starting first with large brick-and-mortar retail
and then moving on to unorganised merchants. It has an over 30 million
user base, of which 50% is active monthly users.
“Since last July, the biggest focus area has been offline merchants.
The MobiKwik wallet is currently accepted at 25,000 retail outlets. The
next big use case is unorganised grocery stores,” informs Akash Gupta,
GM, marketing, MobiKwik.
To enable expansion, it has also launched cash pick up and loading to
support offline consumers in tier-II and tier-III cities. Offline today
contributes to 20% of its GMV. The wallet is available at Relaxo
showrooms, Burger King outlets and Domino’s’ 1,000 stores, among
others. It has also tied up with Madura Garments for its Van Heusen and
Peter England stores.
with large retailers
To be really accepted as a currency and an alternative to debit and
credit cards, mobile wallets must evolve from small transactions to
larger transactions, thus, also increasing the average ticket size. For
example, Future Group has an exclusive tie-up with MobiKwik. Currently,
320 Future Group stores across Biz Bazaar and Central malls accept
MobiKwik wallet for payments.
“Mobile wallets bring incremental traffic to the store as consumers
tend to use the store connected to their wallets, and we also benefit
from the promotions run by MobiKwik,” says Vinay Bhatia, CEO, analytics
and loyalty, Future Group.
Big Bazaar is also working with Oxigen for a co-branded wallet to
create customer loyalty. Pramod Saxena, founder and chairman, Oxigen
Services, says, “This solution is specifically designed for big
merchants like Big Bazaar and airlines.”
Oxigen plans to spend Rs. 100 crore on marketing and branding this
year. Currently, 150 million customers are transacting at Oxigen retail
points and online which includes 25 million wallet users.
The company says it is adding 2-3 million wallet users every month.
Then there is Shoppers Stop which entered into an exclusive one-year
tie-up with the wallet company Freecharge last year across its 230
stores including Shoppers Stop, Crossword and Hypercity.
“The big advantage is convenience of payment. I see this is a great way
ahead for people who don’t have credit cards,” says Govind Shrikhande,
customer care associate and managing director, Shoppers Stop.
At Shoppers Stop, card transactions stand at 56%
while the rest is cash. “The objective is how much of the cash can be
converted to wallet. To enable this, we are targeting young customers
at stores who don’t use cards,” he says .
Shoppers Stop is also leveraging wallet data for targeted and
personalised promotions. “We are using our physical space to promote
Freecharge while Freecharge is using digital to drive traffic at our
stores. Therefore, it’s a win-win,” Shrikhande adds.
Café Coffee Day (CCD) accepts multiple mobile wallets such as Paytm,
Mobikwik and Oxigen. “On the business side, wallets help in reducing
the operational cost of handling cash,” says Bidisha Nagaraj, group
president, marketing, Coffee Day. CCD has recently launched its mobile
app in Bengaluru, Mumbai and Pune with an integrated mobile wallet
Currently, RBI regulations limit digital wallets to transactions worth
R10,000 without a KYC. However, a full KYC increases the limit on
digital wallets to R1 lakh per month. This can enable high value
transactions for customers. MobiKwik has launched Aadhaar-verified eKYC
to enable upgrades in real-time.
However, the mobile wallet ecosystem is fragmented with each player
operating in a silo. Most non-banks currently offer semi-closed wallets
which pose a limitation to the usability of wallets primarily to the
ecosystem built by the wallet operator.
the Unified Payment Interface (UPI) should boost growth as the backend
would be more seamless. “The key for the wallet companies will then be
to differentiate themselves in terms of service and to more intensively
craft the market for small merchants,” he surmises.
in Financial Express)