How m-Wallets are Changing Paradigm of Payment Industry

Date:   Thursday , December 15, 2016

Headquartered in Mumbai, Telr is a leading payment gateway offering a set of unified APIs & tools that instantly enable businesses to accept and manage online payments via web, mobile and social media. The entity prides itself on offering the most secure, reliable and innovative online payment processing service.

The payments industry in India has undergone several key transformations. The ripples of the growth can now be witnessed across a wide gamut of industry verticals, including telecom, retail, ecommerce, and most importantly, banking and finance. The most significant transformation has been an alternation in the consumer behavior. Today\'s consumers are more aware and inclined towards online transactions, the effects of which can be visible across the economy. With de-monetization announcement, the transition to cashless economy will happen faster than the time period of five years to eight years, originally thought. It will be essential that costs of doing online transactions are drastically cut along with focus on enabling safe and secure experience of doing such transactions.

It is essential that variety of payment methods like cards, online banking, wallets and others are made accessible to all sections of society. Innovative payment processing players like Telr, focused on online sellers, are agnostic of payment methods. The online sellers should be able to offer all the above payment methods to their buyers. With over 150 million users, mobile wallets have seeming carved a niche for themselves. Comprising mostly of money transfers and banking related functions, mobile payments have come to offer a significant potpourri of value addition services, including shopping, bill payments and recharges and ticketing. The conversations cover a wide spectrum, from the hefty B2B transactions to consumers paying for items of daily use via mobile wallets.

From $86 million in 2011 to over $1.15 billion by 2016, mobile payments have grown at a compounded annual growth rate of 68 per cent. By 2020, the contributions by tablets and phones in the digital payments landscape are slated to increase to 30 percent. The overall market for digital payments appears mature, anticipating a growth of 210 percent from last, with one in every five smartphones actively indulging in mobile payments. Both consumers and merchants stand to be benefited from the ever-evolving methods of digital payments, offering seamless ease and convenience. In order to boost engagement and acquire customers in the beginning, mobile wallets actively indulged in cash-backs and referral schemes. The colossal effort in the beginning played a significant role in transforming the payments habits and concerting the much-required shift in the consumer behavior. By offering cash-backs and associating with companies providing items of daily utility, including biscuits and two minute noodles, mobile wallets were successful in becoming a household name, at least in the urban dwelling.

While it worked in attracting the eyeballs, soon the industry was confronted by a typical case of Cobra effect. Bigger players with a more privileged funding status diverted in their favor the traction gained by other players. Soon, simply providing cash backs was no longer enough from a strategy point of view and mobile wallets with the right wherewithal, shifted to building a loyal customer base for themselves. Technology is the key to leverage the scalability of wallets usage. Payment processing players like Telr, with its strong risk management and anti-fraud solution, can enable wallet players to see increase in transactions for its online sellers with lesser fraud in such transactions.

This allows the mobile wallet players to actively indulge with the community. As a direct consequence, digital payments became more democratic, now also reaching out to the unbanked sections in the economy. In fact, payment-processing players like Telr can facilitate merchant on boarding as they partner with banks. Banks play a critical role in helping these payment processors to on-board merchants in less than two weeks to four weeks. It is also incredible to witness how mobile wallets revised their business models, to be more inclusive of the different section in the Indian economy.

Tier-II and III towns & cities stand to be benefited from the next wave of innovation by the payments players. With 61 million smartphone users in these parts of the country, there is already a significant potential that waits to be leveraged skillfully. Oxigen Wallet also contributed towards helping the economy evolve, whilst supporting its business model. From offline retail kiosks to assisted ecommerce models, Oxigen worked at the level of grassroots, ensuring financial inclusion. It doesn\'t come as a surprise now that the payment startups have become an apple of the eyes of investors. As per CB Insights, payments startups have crossed over $3.8 billion of funding. The faith shown by the investors in the mobile payments arena is a sign of the massive innovations that are in order. In the near future, payment activation is slated to be via mobile and other technologies, not requiring physical contact. The process is going to transpire in real-time, efficient and secure. Payment methods like Mobile wallets are going to play a significant role in this new paradigm and will be confronted with a bigger challenge of going beyond the current mechanism. Doubts, on part of the consumers are expected and hence, mobile wallets will be seen investing in ways to gain customer loyalty instead of only acquiring. Customers are calling the shots of this transformation. With more competition and awareness, customers have to be retained and no longer be just acquired.