# Mobile wallets in India: What the world can learn Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2018-01-25 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: The Rise of India's Digital Payment Revolution Meta Description: Discover the unlikely success story of India's emergence as a digital payment powerhouse, driven by demonetisation and transformative regulations. Tags: featured Tag URLs: featured (https://financedigest.com/tag/featured) URL: https://financedigest.com/mobile-wallets-in-india-what-the-world-can-learnhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/fd250118-1-2-1736843043647-compressed.jpg) _**Elina Mattila**, Executive Director, Mobey Forum_ India’s emergence as a digital payment powerhouse is an unlikely story. ![Elina Mattila, Executive Director, Mobey Forum ](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/elina-mattila-1736843043552-compressed.png) Elina Mattila, Executive Director, Mobey Forum Until recently, cash accounted for 95% of transactions, 85% of workers were paid in cash, and 70% of [online shoppers chose ‘cash on delivery’ as their preferred payment](https://www.financedigest.com/online-payment-gateway-market-to-witness-a-cagr-of-10-3.html "Online Payment Gateway Market to witness a CAGR of 10.3%") option.1 Yet, the Indian mobile wallet [market is set to grow](https://www.financedigest.com/dental-implants-and-prosthetics-market-market-to-grow-at-robust-cagr-by-2028.html "Dental Implants and Prosthetics Market Market to Grow at Robust CAGR by 2028") by 150% over the next five years, with transactions totalling $4.4 billion.2 Even though its circumstances are unique, the regulatory, technological and commercial drivers of India’s [digital payment](https://www.financedigest.com/will-central-bank-digital-currencies-deliver-a-more-democratic-payment-industry.html "Will Central Bank Digital Currencies deliver a more democratic payment industry?") revolution reveal important lessons for the delivery of compelling mobile wallet platforms around the world. **Pulling the trigger** The main driver of the mobile wallet [market in India](https://www.financedigest.com/exclusive-renault-considers-making-mass-market-evs-in-india-sources.html "Exclusive-Renault considers making mass-market EVs in India -sources") to date has undoubtedly been demonetisation. In November 2016, a national banknote demonetisation removed 500 and 1,000-rupee notes from circulation, overnight. This accounted for 86% of all currency in India. Demonetisation has historically been the last desperate roll of the dice for [failing economies battling](https://www.financedigest.com/behind-ftxs-fall-battling-billionaires-and-a-failed-bid-to-save-crypto.html "Behind FTX’s fall, battling billionaires and a failed bid to save crypto") hyperinflation or crippling public debt. This was different. The [government aimed to use demonetisation as a proactive tool to promote digital payments](https://www.financedigest.com/exxon-chevron-conceal-payments-to-some-governments-watchdog.html "Exxon, Chevron conceal payments to some governments -watchdog"), foster financial inclusion and promote transparency. Whether demonetisation has been a success is the subject of an intense political debate that shows no sign of abating. Indeed, it may be many [years until the impact](https://www.financedigest.com/analysis-financial-literacy-or-luck-the-year-small-time-traders-made-a-big-impact.html "Analysis-Financial literacy or luck? The year small-time traders made a big impact") of demonetisation is fully understood. What is clear, however, is that it has given a massive shot in the arm to Indian mobile wallet providers. For example, Paytm doubled its user base in a year, increasing from 140 million in October 2016 to 270 million in November 2017. 500 million users by 2020 is the next target.3 For banks, service providers, regulators and governments [across the globe looking for ways to encourage mass adoption](https://www.financedigest.com/how-ai-looks-set-to-power-facial-recognition-passport-adoption-across-southeast-asia-post-covid.html "How AI looks set to power facial recognition passport adoption across Southeast Asia post-COVID") of digital payments, demonetisation clearly shows that directly disincentivising cash-use is effective. Whether the ends of demonetisation justify the means, however, is open for debate. More broadly, we can also [see the transformative impact](https://www.financedigest.com/oil-gains-as-investors-see-limited-omicron-impact-on-demand.html "Oil gains as investors see limited Omicron impact on demand") of regulation. Although demonetisation is an extreme example, there are parallels across other markets. [Consider PSD2 in Europe](https://www.financedigest.com/volvo-car-considers-opening-third-plant-in-europe.html "Volvo Car considers opening third plant in Europe"). Banks have an opportunity to capitalise on potential changes in [consumer behaviour](https://www.financedigest.com/from-in-store-to-online-how-the-pandemic-affected-consumer-behaviour.html "From in Store to Online: How the Pandemic affected Consumer Behaviour") to drive adoption of new digital services, particularly in consistently conservative markets where uptake of digital payments has been modest. [**Breaking down the barriers**](https://www.financedigest.com/breaking-down-venture-capitals-gender-and-diversity-barriers.html "Breaking down Venture Capital’s gender and diversity barriers") Due to its proven ability to dramatically simplify the know your customer (KYC) process, Aadhaar (possibly the world’s biggest biometric database) has also played a critical role in supporting the [development of the mobile](https://www.financedigest.com/sony-to-buy-mobile-game-developer-in-push-beyond-consoles.html "Sony to buy mobile game developer in push beyond consoles") wallet ecosystem in India. KYC has traditionally been a face-to-face, in-branch process. In addition, KYC usually requires extensive documentation, such as full address histories and utility bills. In countries with isolated, rural communities like India, the rigours of the KYC process have prevented access to financial services and have contributed to a significant ‘unbanked’ population. Biometric verification technologies are recognised as key to making the KYC process faster, easier and more inclusive, as they remove the requirement to present extensive documentation. Aadhaar is a perfect case in point. To date, 270 million bank accounts have been opened using only an Aadhaar ID and a fingerprint.4 Subsequently, the number of users able to access mobile wallet platforms has increased accordingly. Financial exclusion, however, is a worldwide issue. Mobile wallet platforms should not just be the preserve of young, urban professionals. As banks increasingly [move toward](https://www.financedigest.com/the-orange-essential-oil-market-to-move-towards-constructive-advancements.html "The Orange Essential Oil Market To Move Towards Constructive Advancements") a fully mobile and digitised service experience, simplifying the KYC process with biometrics has the potential to enable wider access to innovative financial technologies. **[Moving beyond](https://www.financedigest.com/the-high-strength-rtd-malt-beverages-market-to-move-beyond-the-monotony.html "The High Strength Rtd Malt Beverages Market To Move Beyond The Monotony") ‘just payments’** The importance of value-added services (VAS) in [driving sustained usage of mobile payment platforms is well-recognised across the industry](https://www.financedigest.com/industrial-automation-incentives-by-governments-in-emerging-economies-drive-industrial-robots-market-fmi-study.html "Industrial Automation Incentives by Governments in Emerging Economies Drive Industrial Robots Market: FMI Study"). Beyond convenience, users need a compelling reason to use mobile wallets on a regular basis. The continued growth of the Indian mobile wallet market demonstrates the power of VAS. Wallet platforms can be used to recharge mobile phone credit, [secure loans](https://www.financedigest.com/pandemic-loans-three-ways-to-secure-recovery.html "Pandemic loans: Three ways to secure recovery"), pay utility bills, book a holiday, buy entertainment tickets, travel on the metro, and even trade gold. To improve the value proposition of a mobile wallet offering, [banks should look to replicate the approach of delivering a comprehensive range of financial and product services within a single digital](https://www.financedigest.com/being-the-best-digital-bank-is-not-enough.html "Being the Best Digital Bank is Not Enough") interface. [Banks can leverage](https://www.financedigest.com/dont-play-second-fiddle-how-disruptor-banks-can-leverage-music-and-audio.html "Don’t Play Second Fiddle: How Disruptor Banks Can Leverage Music and Audio") regulation such as PSD2 to partner with quality third party providers, combining the products and services that consumers want and need. It is imperative banks recognise this opportunity and ­­seize the day. **The importance of collaboration** Overall, the rapid development of the Indian mobile wallet [market demonstrates the importance](https://www.financedigest.com/plaque-disclosing-aids-market-important-changes-in-industry-dynamics-during-2022-2028.html "Plaque Disclosing Aids Market Important Changes in Industry Dynamics during 2022-2028") of reactivity and adaptability. Huge opportunities await those who can successfully navigate the transformative impact of regulation, emerging technologies and shifting [consumer expectations](https://www.financedigest.com/keeping-up-with-heightened-consumer-expectations-in-financial-services.html "Keeping up with heightened consumer expectations in financial services"). For this reason, the ability to collaborate and learn lessons from players [across the world](https://www.financedigest.com/total-allowable-catches-tac-and-fishing-quotas-across-the-world-turning-favourable-for-the-global-mackerel-market-sales.html "Total Allowable Catches (TAC) And Fishing Quotas Across The World Turning Favourable For The Global Mackerel Market Sales") remains as important as ever. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---