NEW DELHI, India—The mobile wallet market in India is poised for significant growth as Indian consumers are increasingly turning away from cash and card, according to a new report.
GlobalData’s 2017 Consumer Payments Insight Survey indicates that India is one of the top markets globally in terms of mobile wallet adoption with 55.4% survey respondents indicating that they have a mobile wallet and use it. India is followed by China and Denmark.
The adoption level in India is much higher compared to many of the developed markets such as the U.S. and the U.K., where consumers predominantly use cards. Mobile wallet transactions grew significantly in last five years, rising from INR24bn in 2013 to INR955bn in 2017, and will surpass INR1tn mark in early 2018.
"The growth in mobile wallet market is fueled by the government's policies to promote electronic payments, coupled with rise in smartphone penetration, and improved telecom and payment infrastructure," said Ravi Sharma, senior analyst at GlobalData.
The government's demonetization move in November 2016 was a game-changer as it had led to a massive cash-crunch in the country as most of the ATMs dried up, compelling people to switch to electronic-mode of payments. While medium to large-value transactions continue to be made through digital banking channels, the low-value day-to-day transactions are carried out through mobile wallets, GlobalData explained.
The total value of mobile wallet transactions grew two-and-half times between 2016 and 2017. Initially considered as e-commerce payment tool, post demonetization, these wallets are now widely used for day-to-day transactions at supermarkets, grocery stores, street vendors, tea stalls, fuel stations, and even inside taxis and auto-rickshaws, GlobalData said.
Mobile wallet has become a mainstream payment instrument in India. GlobalData's survey shows that the share of cash or check in total e-commerce transaction value declined from 31% in 2013 to 16% in 2017, whereas the mobile wallet share jumped from just 7% to 29% during the same period. The usage of payment cards dropped from 38% to 32% during this period.