The new Unified Payments Interface, or UPI, has the potential to make mobile wallets redundant in India. But mobile wallet players are not convinced that UPI will mean end of the road for them, and argue that it will be another mode to load the wallet, making it a faster process.
A couple of months back, the Reserve Bank of India gave its approval for this simpler mode of payment, where a transaction can be executed with just a mobile number or email id. Created by the National Payment Network Company (NPCI), the system already has the backing of 29 banks and is expected to roll out to customers in the coming months. All UPI will need is a smartphone app that supports the payment mode, and banks are expected to integrate this into their app backend.
“UPI will be a new version of payments just like IMPS is one mode of electronic transfer by RBI. IMPS needs 3-4 data points to be shared, with UPI it will be one single ID. It will be a simpler version to pull money from a customer’s account,” explains Sandeep Ghule, CFO of Udio social wallet. “With Udio our aim is to create an ecosystem to facilitate payments, and UPI will be one more functionality added to the app to help in this. It will enhance customer experience.”
Udio’s CFO argues that consumers are not going to stop using wallets, because mobile wallets are targeting a bigger base than many traditional banks. “If you look at the consumer base in India, only 25-30 million are fully banked and these might be the ones regularly loading money into their wallets. But India will have close to 250-275 million users with smartphones and mobiles, who are not using electronic tools for banking,” he points out.
This argument is echoed by mobile wallet Upasana Taku, co-founder of MobiKwik, which has close to 30 million users making it the third biggest mobile wallet in India as per Neilsen. Taku points out that when it comes to electronic payments, user experience and user interface also matter, a domain that banks have not traditionally dominated.
“UPI is like the base, banks have to build on it. I don’t see any reason why mobile wallets will not be used. The only scenario in which they will not be used is if there is some killer app that is much more easier to use. For that to happen you have to believe banks like SBI, ICICI, HDFC will come up with rockstar apps,” says Taku. She highlights that most banks don’t have a core mobile team building these user experiences, usually these are outsourced to some other IT companies.
“I don’t mean to say that all banking apps are bad, but you have to understand that UPI will take time to roll out. Once all banks have rolled it out, then it will take them time to bring up consumer awareness, for users to actually start registering for UPI, and only then can they start using it. That is still far away,” she argues.
“With wallets, we offer electronic transactions, just like traditional banks, but we have other offers like cashbacks, loyalty points etc to help keep the consumers interested. Mobile wallets are seeing deep integration with businesses as well. We have a strategic tie-up with Micromax and will be present on all their smartphones,” points out Ghule.
Traditional banks have never been an easy experience, points out Taku. She says the first wave of adopters for mobile wallets have been the tech savvy, upper middle class folks in India. “People who are very technology savvy are using mobile wallets regularly. If the Sec A and B sections in India are adopting mobile wallets, it is because they don’t find bank user interfaces to be easy. Then you can imagine how difficult it will be for those who are not so tech savvy,” says Taku.
India has over 300 million citizens who don’t have a bank account yet, reminds Taku, adding how she is not convinced that all banks will end up creating an app or system simple enough for them to use.
“It’s not just in India, look at any market, US, Australia, etc traditional banks are not known to create front-end, user friendly tech savvy organisations. Anybody like PayPal can give them a run for their money,” says MobiKwik’s co-founder.
Mobile wallet companies are convinced that the large population in India means there will be plenty of opportunities to do business. “Market will evolve and the population is so large that there will never be just one proposition to do electronic transfers,” says Ghule.