Once interoperability is put in place, firewalls between payments banks, digital wallets will not exist facilitating seamless transaction
Digital payments space in India is set to swell in 2019 as the number of shoppers-on-the-go is poised to jump manifold. This will be powered by increasing smartphone penetration and proliferation of netizens.
This is mirrored in a recent report published by the Niti Aayog that sees the digital payments market in India to cross the $ 1 trillion mark by 2023. Incentivising cashless transactions going beyond the conventional cash backs and related freebies and rising levels of digital awareness among consumers, were cited as key drivers.
Interoperability between pre-paid instruments
The mobile wallet segment, which forms a significant chunk of the domestic digital payments space will be the direct beneficiary of this growth. The framework of the payment industry has gone through a transformation fueled by some significant developments in 2018. To begin with, the Reserve Bank of India (RBI) issued broad-based guidelines for promoting ease of doing digital transactions among the masses by allowing interoperability among mobile wallets. To be implemented in a phased manner, interoperability is expected to go a long way to bolster the use of digital payment tools among the public, as it allows smooth transactions between different kinds of prepaid instruments (PPI), e-wallets being the chief among them. In the post-interoperability phase, firewalls between payments banks and PPIs like digital wallets would be obliterated, facilitating a seamless transaction framework between users and merchants.
Consolidation will pick up in e-wallet space
Further, the consolidation phase which has already started in the e-wallet domain will pick up pace, as companies intensify efforts to gain access to innovative technologies and create customer-facing transaction platforms. As new age consumers demand an omnichannel shopping experience in an already overcrowded market, e-wallet players will need to move beyond their core offerings and expand their portfolio of services to make a difference in the marketplace.
For instance, once interoperability comes into effect, mobile wallets can issue their branded pre-paid cards to their customers for online and offline transactions. The mobile wallet companies will no longer have to collaborate with banks to issue such cards. Alternatively, mobile wallets can approach leading payment network operators to roll out such pre-paid cards. The key here is to accelerate the go-to-market phase. That way people will take mobile wallets more seriously in the personal finance space. Going beyond paying mobile recharges or utility bills, people will look at mobile wallets as micro-credit or micro-insurance instruments.
Mobile wallets have to focus on security
Having said, that breaking into that growth trajectory hinges much on their efforts. Going forward, mobile wallet players will have to rejig their business strategies lock, stock and barrel to adapt to changing market dynamics, both domestic and global. The ability to process large transaction volumes and maintain operational scales will determine the level of competitive edge e-wallet companies will enjoy in the market.
In a nutshell, the mobile wallet eco-system in India is fast evolving to emerge as a convenient and trusted mode of transaction. RBI guidelines for interoperability among various pre-paid instruments will add more credibility to mobile wallets. Now the focus shifts to the safety and security arrangements that mobile wallets adopt to shore up customer confidence. If this is ensured, the ambition will be the limit for mobile wallet players.
INTEROPERABILITY
- Once interoperability is put in place, firewalls between payments banks, digital wallets will not exist facilitating seamless transaction
- Mobile wallets can issue branded pre-paid cards and will not have to collaborate with banks
- People will look at mobile wallets as micro-credit or micro-insurance instruments.
The writer is founder & MD, The Mobile Wallet
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