Digital wallets started off with offering consumers a way to make retail payments, such as phone recharge and bill payments, but are now gearing up to usher in financial inclusion by providing reliable service to the hundreds of millions of unbanked and under-banked. However, a lot of things still need to fall in place for wallets to gain more widespread adoption.
For one, digital wallets lack inter-operability. Consumers need to go through a know-your-customer process to transact more than Rs 10,000 a month on these – which could prove a point of friction, and the merchant network that accepts wallets also has to significantly increase in size.
Although most wallet companies are quick to dismiss the impact that the Unified Payments Interface, an initiative of the National Payments Corporation of India which will allow fund transfer between banks with the help of a single identifier, and say that UPI will just be another way to add money to their wallets, some experts say we have to wait and watch.
“While the future looks promising for wallets one of the caveats is the impact of UPI - but how this will work and what it will mean in terms of experience for customers in the real world, remains to be seen as the UPI products are yet to be launched commercially,” said Vijay Mani, partner at Deloitte India.
“Another caveat is whether customer awareness and adoption can truly be achieved for newer use cases, the way it has been for some of the other more popular usecases, and each additional usecase represents a new challenge where a lot of work is needed,” added Mani.