About three decades ago, we joined in queues to withdraw our own cash in a bank, and stood painfully in another to pay our bills. And then, there was the horror of having your cash stolen, or the burden of carrying loads of it in the fear that it might be.
True, credit cards and debit cards have since solved many problems on that count, but not all places can be reached easily by them.
Even at that time, Indians travelling overseas could not afford to get credit cards, and traveller’s cheques were the way out for most.
Now, in the digital era, old ideas of money are taking new shape, thanks to revolutionary technologies. What’s more, they are able to cut down the time taken for transactions, and have a penetration towards small shops that can potentially go beyond the usual haunts where debit and credit cards go.
The mobile wallet, an idea which is exploding in growth, is one such.
Picture the mobile wallet like a pre-paid card resting on your desktop or mobile handset that does not even literally need a card, or a multi-purpose recharge coupon that gives you all the convenience of a debit card and more – without the headache of having even a bank account. New companies such as MobiKwik, PayTM (an offshoot of mobile services company One97) and Oxigen Services have emerged to create such wallets or virtual cards and provide services that link technology, merchants and consumers.
Using an account with these service providers, you can transfer money into a mobile wallet electronically, either via credit card or bank account. Some companies like MobiKwik even offer cash collection from your doorstep.
This wallet, which essentially stays as a software record on the Internet – or “cloud” - can then be accessed by a user name and PIN or password for multiple transactions – like a private bank locker.
It is a lot like online banking but the difference is in the reach and additional convenience you get in dealing with smallest of establishments –because there are service providers busy stitching up partnerships beyond the usual pale of credit card companies.
You can decide on how much or how little money you want to store in the wallet (the maximum value has been capped at R 50,000 by Reserve Bank regulations) and your wallet can only be accessed by you either online or via a smartphone application.
“From payment of utility bills and online shopping on merchant sites to paying in local stores using mobile wallets, we plan to expand the use of mobile wallets,” says Vijay Shekhar Sharma, founder and CEO of PayTM.
The companies say they have taken extra safeguards to secure the accounts. If you change your handset or mobile number you will be prompted to change your password or PIN code to access your account. And there are checks and balances if you forget your password – just like an Internet banking account.
According to US-based Allied Market Research, global mobile wallet market is expected to grow at a compounded rate of over 127% to touch $5.25 trillion by 2020. The growth will be driven by Asia-Pacific countries, where mobile wallets are expected to grow at a compounded rate of close to 140%, it says.
Research firm Mediacell estimates that India will see new smartphone sales of 225 million in 2014. With cellphone penetration in excess of 700 million subscribers, India as a market is expected to become bigger for mobile banking and allied services like mobile wallets as smartphones become cheaper.
“The momentum is building. With increasing penetration of smartphones and people increasingly using data on smartphones, a lot more people are now keenly using mobile wallets,” says Bipin Preet Singh, Founder and CEO of MobiKwik.
“We have 5 million registered users, of which 3 million are transacting on mobile phones and we are focused on growing the mobile platform,” he adds.
PayTM, which started offering mobile wallet services only last January, already has 2.5 million users, and aims to have 10 million active users by September-end.
Oxigen, which essentially started off as a platform to pay bills and recharge mobile phones, now has close to a million wallets.
In exchange for the services offered, these companies charge a small percentage of the transacted amount as their fee/service charge. For instance, MobiKwik charges 3-5% per transaction. Other companies say the fee varies for each transaction, but is typically in the low single digits. As the number of transactions grow and more services and merchants are added, companies expect their revenue to surge.
Online retailers and utility companies were the earliest to befriend mobile wallets. Now old brick-and-mortar shops are being roped in by the hundreds. Oxigen is looking at a universe in which college students will pay for most things with mobile wallets.
MobiKwik’s Singh says it has partnered close to 300 merchants across categories and around 100,000 transactions are processed daily. PayTM claims to have 500 merchant partners, with a plan to scale the number to 5,000 merchants by September. It expects R 1,500-2,000 crore could be transacted on its platform this year.
PayTM is developing a system under which you could walk into your neighbourhood store and pay by simply transferring money from your mobile wallet to the retailer’s wallet — just like cash. Earlier this year, it launched a chat-enabled app for smartphones, which helps shoppers literally bargain for a product before buying it. That’s as Indian as it gets.