As India struggles to make sense of the entire demonetisation move by the government of India by removing the old Rs.500 and Rs.1,000 currency notes as legal tender, this could actually indicate a big shift—in the way we manage cash, in the way we make payments for essentials and also the way we shop. The transition, which the government hopes for, to a cashless economy means you will be ever so reliant on your credit and debit cards, as well as your smartphone or PC. The idea is to enable your smartphone for money transfers, instant transactions, in-store payments, bill payments and more.
According to UK-based market research company Technavio, by 2018 the mobile wallet market in India will grow at 140%, as against the global average of 34% growth. This puts apps such as Paytm, Freecharge and PayUMoney, to name a few, in prime position.
On 21 November, Paytm announced that on the previous weekend, they witnessed seven million transactions, worth as much as Rs.120 crore, after the government withdrew Rs.500 and Rs.1,000 currency notes. Conspicuous by their absence, and the deafening silence, are Apple’s Pay and Google’s Android Pay. If ever a time was ripe for capturing the hearts and minds (and perhaps even the habits) of iPhone and Android users in India, this is the time.
Also read: The phone as a wallet
The basics of mobile wallets remain the same—they allow you to link your bank account and credit or debit cards to the wallet, and make literally all sorts of payments—utility and phone bills, mobile, pay for cabs, book hotels, flights and train tickets, pay in stores, pay at fuel stations, pay insurance premiums and even pay at certain toll plazas on highways across India, for example. And we are not even scratching the surface here. A lot of apps including those of ride sharing services such as Uber and Ola, as well as many shopping platforms, have partnered with mobile wallets to offer another easier payment option for users.
There were indications that something was set to change, all along. In April, the Unified Payments Interface (UPI) was launched. Initially, it was available to certain number of users only, mostly bank employees. In August, the UPI was made available to all customers of 21 banks operating in India, which includes Andhra Bank, Axis Bank, ICICI Bank, Canara Bank, Oriental Bank of Commerce, Union Bank of India and Yes Bank. Mobile operators also don’t want to be left behind.
For example, Airtel has the Airtel Money app, which is a mobile wallet in its own right—pay bills, recharges and money transfers. Rivals Vodafone’s m-pesa app does similar stuff—bill payments for utilities, and money transfers. According to the latest data published by the National Payments Corporation of India, the Immediate Payment Service (IMPS) saw a 18.8% growth in total mobile based transactions during the months of September and October 2016. Incidentally, these numbers are for just applications offered by banks, to their customers, and do not include third-party mobile wallets apps. Read more.
This does beg the question—is this the correct time for Apple and Google to consider bringing their respective Pay platforms to India, considering the shift to more card based transactions and cashless payments? Perhaps it is. For starters, they already have the potential user base in place, totting their iPhones and Android phones.
Apple Pay, as the name suggests, is a cashless and contactless payment system that can be used to checkout at physical stores as well as online stores. The Pay app pulls in the payment details from credit and debit cards or bank accounts that you may have linked with the Apple Wallet app. It works with iPhones since the iPhone 6, the Apple Watch, a range of recent iPads and also on the websites and apps which have integrated “Pay with Apple Pay”—it will use the TouchID biometric authentication feature wherever available on your device.
Similarly, Google’s Android Pay solution also links to your credit or debit card and banking details in a similar way, to make payments at stores without needing cash or even to swipe your credit card at that time. It also utilizes the near field communication (NFC) feature on recent Android phones, which allows you to simply tap your phone on a payment terminal in a store, and the transaction is complete.
For both of these solutions to work in India, they will need to tie up with credit cards such as Visa, MasterCard and American Express, and also with banking institutions to allow users to plug their debit cards and bank accounts to these mobile wallets.
At the same time, Apple and Google will have to ensure support for their platform across offline and online stores through payment terminals, for shopping, entertainment, as well as food bills, for example—and that should include big retailers as well as smaller but popular stores, before these payment platforms even get on the map currently owned by the likes of Paytm. But remember, Apple Pay and Android Pay do not exactly replicate Paytm and other wallet apps at the moment, and remain focused on just cashless transactions to complete a purchase. They do not yet offer the value-additions such as bill payments, mobile recharges, utility payments etc.
“You are what you repeatedly do,” is what Aristotle once said. And that defines human nature. Familiarity with one platform means it will be hard to wean away users to try something new. And the clock is ticking for Apple and Google—this is perhaps the best window of opportunity to get a strong foothold in India. Admittedly, they would also perhaps have been taken by surprise, like most of us were, but a nimble footed response now could define the entire journey.