India is adding about a million new mobile wallet users every day, according to industry sources.
The rapid increase in new users comes on the back of the cash crunch, which has hit the country ,following the government’s move to demonetise 500 and 1,000-rupee banknotes. The situation is likely to take more time to normalise.
The biggest beneficiary of the rise is Paytm, the country’s largest mobile wallet company, which is adding more than half a million new users every day, and has crossed 170 million wallet users. Its nearest rival, MobiKwik, which is adding 2.5-3 lakh new users, followed by Snapdeal-owned Freecharge.
“This is the biggest change in India becoming cashless… new features such as point-of-sale functionality, merchant acquisition and ease of use are helping to increase the base faster,” said Vijay Shekhar Sharma, founder and CEO of Paytm.
Since demonetisation, Paytm has added 20 million new wallet users in small and big cities, resulting in millions of transactions every day across small and big merchants. They are used for paying bills, online shopping, and even money transfers.
The government’s initiatives have also helped.
For example, based on RBI regulations, Paytm on Monday allowed its “registered” merchants to transfer R50,000 (it was R25,000 earlier) to their bank accounts.
For the first time, people who stayed away from digital payments or use of plastic cards, have started using wallets.
However, the rise is new wallet users comes with the risk of a fall-out once the cash returns into the system. According to a CEO of one of the top three private banks, the cash situation will become much better in the next one month.
But Sharma and other wallet company owners do not agree. “This a permanent change in behaviour. Cash has lost trust… In organised retail people have transferred from cash to non-cash, so I don’t know why it won’t happen in unorganised retail,” said Bipin Preet Singh, founder and CEO of MobiKwik.
Singh also believes that for small merchants, mobile wallets is the only way of making them accept digital payments. “The biggest chunk of cashless payments will be wallets, and not UPI or net banking or cards,” he said.