"Is mWallet the next big way to get rid of your bills" says Pradeep Sampath

Mobile payment generally also termed as Mobile money, is a payment mechanism via a mobile device. This is a very quick payment system and one does not need to carry credit/debit cards or cash.  Mr. Pradeep Sampath, Chief Operating Officer, MMP MOBI Wallet Payment Systems Limited, Tata Teleservices throws light on key drivers, advantages and challenges faced of this emerging mode of payment mechanism.

Drivers of mobile payments or digital wallet services in India?

As per a report by Bank of America, mobile payments will form 10 per cent of the total payments in India which was just 0.1 per cent in financial year 2015. They are expected to grow 200 fold in 7 yrs to $3 trillion and will benefit IT, telecom, banking and mobile wallet companies.

With evolution of alternate payment methods, the report expects payment though paper to fall below 2 per cent. It expects gradual reduction of cash from the economy and said e-payments will help to soften lending rates and support growth over time.

Some of the key drivers for this growth will be improving smartphone penetration — to double in 3 years, the young population – 60 per cent of the population being under 35, and shift to digital commerce as buying products is cheaper online.

Challenges to mCcommerce and mWallet services in India?
While there has been a tremendous uptake in the usage of mobile wallet services in India. The challenges that we face as a mobile wallet service provider are broadly two:

Engaging more consumers to register for your wallets: The challenge is not in terms of registering, rather engaging a customer and getting transactions done through the customer.

Getting more merchants on-board, both online and offline: This is a critical challenge for us as a mobile wallet player. Moreover, it is not an overnight solution that will be achieved since it takes some bit of time to get to create this ecosystem where we create merchants as well as we create customers.

Evolution of Mobile Wallets

“With growing penetration of smart phones across India, certain players starting looking at replacing credit/debit cards and hard cash with mobile wallets. The mobile money concept was finally envisioned in 2011 post which the RBI introduced the registration called prepaid payment issuers in the country. Unlike any new innovation, the mobile wallet was to replace the cash economy which constitutes 95% of the transactions that happen in the country. The acceptance of mobile wallets is far more challenging as this technology and its players have to first begin with creating an ecosystem.”

Expected Merchants/Retailers Behavior

“Appealing to merchants is vital to a mobile wallet’s success. The merchant has the power to choose the technology that their customers will ultimately use. Merchants can provide their customers with a direct marketing and communication channel on their mobile devices. Furthermore merchants can offer loyalty programs, discounts, and custom-made offers which will help them draw customers to their stores, encourage repeat visits which ultimately increases customer loyalty.”

Expected Consumer Behavior

“The increasing adoption of affordable smart-phones, tablets and portable PCs is a crucial driver behind changes in consumer payments and transfer systems. With each passing day more consumers use their smart devices to shop online and make transactions. Furthermore, there are numerous mobile wallet players emerging today allowing their consumers to pay in-store with their mobile devices. The challenge here is not only to provide a secure and convenient mechanism for transferring  payment account details to the merchant but to convince the customer to use his mobile wallet over hard cash or credit/debit card. We will see a definite rise in E-payments and M-payments redefining the traditional payment system.”

Advantages of Mobile Wallets/ Mobile Wallets taking over credit & debit cards

“The downsides of theft and loss associated with credit cards and debit cards has contributed to the increase in scope of mobile wallets. Mobile wallets provide many benefits to consumers. In-store purchasing process has become simpler with mobile wallets as one has to no longer stand in long queues and instead can chose to pay via a tap or scan of a mobile device. Furthermore mobile wallet provides its customers with the convenience and ease to make purchases in mere seconds. The shopping experience therefore becomes quicker and easier which in turn generates maximum customer satisfaction. I strongly believe that mobile wallets are the next big thing and here to stay.”

* Disclaimer: The views expressed here are solely those of the author and Adgully does not have any role in it