Indrani Sen: The Window of Mobile Payment

03 Feb,2020

By Indrani Sen

 

An article in www.emarketer on January 21, 2020 shared a chart of the proximity mobile payments users of different countries showing that in 2019 India featured in the “very high category” bucket in terms of adoption of mobile payments along with Denmark, Sweden and South Korea.

While, India still has to go a long way before catching up China’s rate of penetration among smartphone users—81.1%, there are other evidences which show that the rate of growth of cashless payments in India has been faster than that of China during the period 2015- 2018 as shown in the chart below on the left (https://qz.com/india/1746910/cashless-payments-growing-faster-in-india-than-almost-anywhere-else/).

 

 

In an article on May 9, 2019, SP Global Market Intelligence showed that during 2016 to 2018 mobile payments in India has been growing at a faster rate than card payments as shown in the above chart on the right (https://www.spglobal.com/marketintelligence/en/news-insights/blog/mobile-payment-apps-driving-fintech-frenzy-in-india). Wall Street Journal affirmed the growth of mobile payments in India in their article tiled Cash May Be King in India, but Google Is Prince of Mobile Payments on September 19, 2019 showing how millions of Indian mobile users were using Google Pay to pay for their transactions.

In another article Will India’s payments ever be fully mobile? published on September 23, 2019 Edd Gent wrote “But while that expansion sounds impressive, industry consensus is that digital payments still only account for 10 to 15 per cent of all retail merchant transactions, says Vijay Mani, partner at Deloitte India, with mobile predicted to play second fiddle to cards, at least in terms of value.” He further argued that “only a quarter of Indians own a smartphone with the capabilities to use banking apps and popular payment services such as PayTM, Google Pay and PhonePe, though with 40 per cent of Indians under the age of 18, the percentage of adults using them is likely to be considerably higher” (https://www.raconteur.net/finance/mobile-payments-systems-india).

Global Advisory KPMG published an highly informative report in August last year Fintech India- Powering mobile transactions covering Indian Mobile payment ecosystem in the backdrop of global mobile payments ecosystem, key learning and  major challenges. The report claims that digital payments in India are growing at a CAGR of 12.7 per cent in the number of non-cash transactions through mobile phones (https://assets.kpmg/content/dam/kpmg/in/pdf/2019/08/Fintech-in-India%E2%80%93Powering-mobile-payments.pdf).

The window of mobile payment is a reality which advertising and marketing industry cannot afford to ignore. The FMCG industry particularly needs to explore the opportunities of communicating with their customers through this window as an extension of their mobile advertising. KPMG report listed the emerging business services provided by Mobile Payment Service Providers (MPSPs) as Financial Services, Mobile Marketplaces, Utility & Bill Payments, Payment Containers and Government Enablers and there can be innovative opportunities of associating with some of these services as well as mobile wallets.

In the report, KPMG had given recommendations for transforming India into a leading payment ecosystem to all the stake holders, the Government, financial institutions, regulators and merchants. In the Union Budget announced on February 1, 2020 the only consideration given to digital payment is the Government’s Aadhaar-enabled payments system which is subject to various other financial arrangements and security considerations. The wish list of the digital industry, particularly related to incentives for digital payments has not been considered. It seems that the Government has put its vision of Digital India on a back burner and has definitely not considered the recommendations made by KPMG and other such advisory bodies.

 

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