‘Use X digital wallet and get 10 per cent cashback,’ is a sentence we have become familiar with in our smartphone-dependent lives. In India, the options are limitless when it comes to choosing a digital wallet — there is Paytm, the biggest player in the market claiming 100 million users, followed by rivals MobiKwik and FreeCharge and newcomers like PayUMoney, etc.
But the digital wallet is morphing beyond recharges or pay for everything from online food delivery to cab rides and even booking a new home. KYC is the next buzzword for the big players like Paytm and MobiKwik where they want to verify customer details like address, identity to increase the digital wallet limit to Rs 1 lakh per month. Currently, RBI rules limit digital wallets to Rs 10,000 without a KYC.
“With a full KYC, we can extend this Rs 10,000 limit to Rs 1 lakh. What we have seen is that for digital wallets, the use case is expanding beyond just paying bills. We don’t want any limits on how a digital wallet should be used in the future and getting the KYC done is the first step in this,” says Nitin Misra, VP Products at Paytm.
The app plans to go big with its KYC project and will partner with an entity to create walk-in eKYC centres where customers can just come in, do the digital verification and leave. At present, Paytm has select centres where customers can do the KYC, but Paytm wants to make this an all digital affair by just syncing Aadhaar data with their services.
“A customer will walk into the centre, give their fingerprint impression and since that is linked to Aadhaar, the KYC will be done. We plan to roll this out fully by the end of the year,” says Misra pointing out that the idea is to make the process as seamless as possible.
Rival MobiKwik is working on something similar. Upasana Taku, co-founder MobiKwik, says, “We’re hoping to make some noise about this KYC feature. With Aadhaar verified eKYC, we have all the licenses in place and expect to launch soon. The tech for making this possible with the biometric devices is ready. By March 2016, we’re hoping to do millions of these KYC verifications.”
MobiKwik does KYC online now with customers uploading their scanned documents, and a customer representative from the company going with a printed form to verify original documents. Paytm also offers something similar.
Virender Gupta, PayUMoney’s head for Wallet and Checkout business, points out that as consumers shift from smaller ticket items like recharges, bill payments to higher ticket purchases like hotel and flight bookings, the wallet needs to be prepared.
MobiKwik’s Taku concurs that while the usage cases for digital wallets have increased dramatically. “People are buying furniture, flight tickets. For instance on Pepperfry, you can pay via MobiKwik. In such cases, we need to increase the limit,” she says.
But increasing cash limit is not the only way digital wallets want to expand in India. Paytm has grander ambitions, where it hopes to become a mode of payment even in offline retail.
“We wish to tie-up with organised retail partners, your local kirana shops and create app-cash points. So these merchants will accept Paytm payments, but also give you top-ups and in some cases do the eKYC as well. The idea is to drive up our offline merchant payment points as well. We plan to have 50,000 of these by the end of the year,” says Misra, adding that they were essentially creating a Paytm accepted merchant-network pretty much everywhere.
MobiKwik has also tied up with Big Bazaar and Sagar Ratna franchises enabling mobile payments. Taku emphasises that for wallets to succeed they need to create a strong merchant network.
But there are still issues, especially the fragmented payment experience and poor connectivity. PayUMoney’s Gupta feels many banks are still using legacy infrastructure and that the innovation will have to come from payment companies.
“All we’re doing is transferring electronic money from one platform to another. People using the digital wallet already have a debit card and some experience of the online system. For wallet players to really grow in 2016, we’ll have to reach people who are not on the electronic system,” says Gupta.
MobiKwik’s co-founder feels that digital wallet players need to focus on the customer in order to succeed. “Our app weighs the least in terms of size. We’ve optimised it even for Edge users. In terms of transactions, we can see that we are reaching out to the budget user. In India, credit card usage is low, and debit cards reign supreme with SBI on top. For us, SBI has been the number one card payment option and for many users this might be the only debit card they have,” she says.
In India, the smartphone grew at 21 per cent in Q3, according to the research firm International Data Corporation (IDC), driven by sales of 4G phones. In addition to this mobile driven e-commerce has been steadily growing with e-commerce websites like Snapdeal, Flipkart are seeing close to 70 per cent of their business order from GMV (Gross Merchandise Value) from mobile, according to 2015 Mary Meeker report. In such a scenario, it is no surprise that India’s digital wallets are mushrooming as there is space for growth.
But the top players emphasis that survival depends on understanding the space. “We’re seeing even e-commerce players creating their own wallets, etc. But you have to understand the customer and only those who are focussed on payments will survive. You have to realise how you can make customer experience easier,” says Taku.
Paytm’s Nitin Misra, however, feels that growth of numerous digital wallet players comes with an advantage. “It is spreading awareness about the system in the market. This is not to say we are not taking cognizance of our competition, we are, but in the end the best products will survive.”
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