By Gaurav Gupta

There is more to digital payments than simply transactions. Substituting a credit card payment by an NFC phone tap is hardly an improvement. Erstwhile PayPal President David Marcus said “That’s just technology for technology’s sake. For mobile money to truly take off, it must offer more. It has to be the experience you have online today.”

PayU Money, Paytm, MobiKwik, Oxigen and My Mobile Payments have captured around 70% of the market revenue in India. All these leading apps appear more or less similar in terms of user propositions offering money transfers, payment of utility bills, recharge of mobile balances and payouts to merchants. The competitive focus seems to be more towards acquiring new merchants, building exclusive partnerships and new use cases. For example, Paytm now brags that you can use their wallets on Indian oil pumps, and MobiKwik is proud to be the primary payment option on the IRCTC app.

The space is getting more and more cluttered with all sort of entities providing similar payment wallet functionalities. Telecom operators have claimed their stake with their own wallets. All major banks have thrown weight behind their wallets with fancy names such as ICICI Pockets, SBI Buddy, HDFC Chillr. Phone manufacturers have smelled blood, and Micromax will now pack its own wallet as a pre-loaded application in its phones.

The primary way to attract wallet users is largely by offering deep discounts on purchases of products, starting from daily necessities to tickets. Spoilt with funds, wallet companies are spending large amounts of cash on advertising in a blind race to acquire users. This is reminiscent of the way e-retailers such as Flipkart & Amazon buy customers.

A study conducted by Javelin Research in the United States highlighted the perceived lack of value in making payments through mobile device as one of the Top 3 reasons for people not ditching the traditional payment methods. Wallet companies have to think beyond facilitating payments. Mobile wallets can offer a lot more than a leather wallet ever could. The focus should be on transforming user experience and convincing users to leave their leather wallets behind.
Here are some ideas on what all could be the next frontiers for mobile wallets:

Micro investments
Imagine this: Every time you make a purchase using your wallet, the purchase value gets rounded to the nearest rupee. This spare change gets invested in a portfolio of your choice. You are also suggested portfolio allocation options based on your age and your income level. The idea of spare change being used for investments clearly sounds appalling, but this is exactly what a company by the name of Acorns is doing. With over a million users, the idea is no longer quirky. I believe Paytm would be better off by changing its jingle to “Chutte ke jhagde band karo, Paytm se investment karo”

Micro Loans
The traditional lending model is based on your credit history, which is really your loan repayment history deciding your future loan acquiring capability. In a seminal research paper published by MasterCard Advisors, it is argued that bill payments behaviour can be used as an indicator of creditworthiness and could drive lending.

EcoCash Loans, a wallet service in Zimbabwe, provides no-collateral + no-paperwork small loans. An EcoCash subscriber who has a steady and verifiable history of transactions and maintains at least $5 balance in the account over a three month period qualifies for credit. The service raked up 1 million new accounts in just three months.

Closer home, Micromax has unveiled its wallet service with a micro-loan facility. Telecom wallet companies are in an even better position to assess creditworthiness with bill payments / transactions data augmented by subscriber & call data.
You should not assume that micro loans are only for those who are under-served by the banking system. I am sure most of us reading this would prefer seeing a micro loan offer instead of a “You have run out of account balance” message on their screens.

Receipts in wallets
Most of us have scrambled at some point of time in our lives to find that elusive crumpled receipt, which we so desperately need for a return or an exchange at a retailer. It would be so handy to have receipts in the wallet for the payments made. CapitalOne allows its wallet users to snap a photo to connect the receipt with the charge in the app. More advanced renditions of this could possibly hook up with merchant POS systems to provide itemized details.

Gamify the wallet experience
Gamification aims to compel customers to interact with the wallets. the story of Starbucks gamifying the coffee buying experience is widely reported and eulogized. A more generic mobile wallet gamification is seen in the mPay App launched by Canadian Tire. Users are awarded badges for specific activities such as an online purchase or payments at specific merchant stores. A collection of 10 badges allows the user to earn 10x the amount of Canadian Tire Money when they make their next purchase at Canadian Tire.
Gamification can elevate customer experience and retention levels.

All loyalty programs in one wallet
I regularly go to a salon to maintain my mane. I would be happy to use my wallet, if during the transaction my wallet not only allowed me to pay but also helped me redeem my loyalty points. If this idea sounds far-fetched, I suggest you to look at Points Loyalty Wallet. This wallet allows its users to track, exchange and redeem loyalty points, all in one single place, without the hassle of carrying physical cards or remembering numbers. Points Wallet have now stretched the play by allowing points or miles to be converted to currency, which can be spent online or at a merchant. This currency conversion allows the users to spend loyalty points in any way they choose.

Help users spend better, and not just faster
I believe we are attacking the wrong problem when wallet companies focus most of their energy in speeding up transactions. I want PayUMoney to not only store my credit card, but also tell me that I should use a particular credit card, rather than another, because it gives more rewards or has a better interest rate.

A wallet must add value in the context of the transaction.

Wallets could start with the basics of showing product information and comparison shopping as a part of their ‘better spending’ suggestions. Maybe in the future they will be able to give you some sort of an affordability check as well when you are buying that swanky LED TV.

The battle-space of wallets in India is going to get really crowded. Beyond cash and payments, only the wallet which would bring compelling utility to the user would last the battle.

About the Author
Gaurav Gupta is an alumni of IIM Ahmedabad. He has extensive experience helping companies transform businesses using digital. He can be reached at


Posted by The Indian Economist | For the Curious Mind