Understanding Product Adoption Lifecycle of Mobile Wallets in India

5 min readFeb 12, 2017

What is Mobile Wallet ?
Mobile wallets are digital instruments that you can use to store money for digital payment for several different transaction types. Consumer loads money into any of the selected mobile wallet by transferring it from bank account using net banking, credit / debit card. In the wake of recent demonetization drive by Government of India (GoI), RBI increased the monthly balance limits from INR 10,000 to 20,000 — with some exceptions like Airtel money allowing Power Account users with daily spend limits of 1 lacs INR.

Using Mobile Wallets :

In case of semi-closed mobile wallets, one can transfer money to the person(s) who has same wallet (like paying a friend who uses paytm or merchant who is registered on paytm).
Most wallets also let users make payment by entering credit, debit card information every time they want to complete transaction. But, this becomes time-consuming process when making frequent payments using this method.
Some wallets like Mobikwik / Airtel Money allows users to load cash by visiting any of the designated outlets nearby.

There are digital payments companies (Paytm, Chillr, ItzCash, FreeCharge) who focus on money transfers, some telecom companies that own digital wallets (Jio Money, Airtel Money, Vodafone M-Pesa) and then there are banks who have their own mobile wallets which are linked to bank accounts seamlessly. (SBI Buddy, ICICI Pockets).

Adopting to Mobile Wallets :
The study (Indian m-wallet market: Forecast 2022) cited consumers mindset as the biggest factor that hinders the growth of Indian m-wallet market, as they are more skeptical about the safety and security issues, as in the case of internet banking, as users worry that their devices could be hacked or attacked by some kind of virus. Also, often people complain that their money has been debited but the transaction got declined while transacting via mobile, and to avoid such problems users keep away from using mobile wallet related services, it added.

As seen in the info-graphic above, Mobile Wallets in India have already surpassed credit card users. With the recent demonetization drive & GoI making it easier for consumers to go cash-less in daily transactions, Mobile Wallets can certainly be considered in the ‘Early Majority’ phase of product adoption lifecycle. Study says, the Indian m-wallet market is expected to grow at a compounded annual growth rate (CAGR) of 141 percent to reach Rs 30,000 crore by the end of 2021–22. Factors fueling this growth are increased usage of smartphones, robust mobile internet penetration, growth of e-commerce sector together with increasing disposable incomes.

Challenges ahead :
It seems every player in this market is trying to create their own ecosystem to gain, grow & retain the customer base by integrating additional features like promotions, payback offers, own marketplace etc. But the problem is the cash consumers load into these wallets is no longer just neutral cash. Uber supports Paytm but its rival, Ola uses its own wallet called Ola money. Cash stored in Ola Money can be used only for Ola Partner merchant. If you place an order on Swiggy and it’s cancelled for some reason then cash paid will be refunded immediately to Swiggy wallet but it can only be used to order food from restaurants on Swiggy platform. So consumer’s money is locked and cannot be transferred back to his/her bank account.

Users need to make complex decisions in advance before committing to any of these platforms for long-term. In addition to the complex decision making, another biggest deterrent for people is problem of security of their own money. According to a Firstpost article, Jan 2016 saw crores of money being siphoned out of SBI & Axis bank mobile wallets because of security breach.

Mobile wallet market is segmented into three broad services

money transfers from wallet to wallet, bank to wallet and vice versa (38% share)
recharge and bill payments for mobile, DTH, landline, electricity and other such services (31% share).
online shopping, hotel/travel/movie ticket reservations, online food order, payment of insurance premium, recharging Metro rail card and others. (remaining 31% share)

Mobile Wallets & competition :
Currently available cashless payment systems include credit/debit cards, e-wallets such as Paytm, Unified Payment Interface (UPI), IMPS, USSD, RTGS, and NEFT.

Comparison of digital payment options :

Future opportunities for growth :
There are opportunities in Mobile Wallet market that can help play a crucial role in future growth of digital payments in India.

Tapping into the untapped market: According to data from the RBI, India is the home to the largest number of unbanked families (more than 145 million), potentially one of the largest bases to capitalize on
A focus on providing merchants with multichannel payment services
Wallet payments through near field communication (NFC)
Tokenization, biometrics — because mobile devices will be a mainstream option for person-to-person or person-to-business payments
Financial inclusion: a wallet that can cater to this will definitely rule the Indian market
Analytics solutions — payments transaction data analytics will be a major source of payments-related revenue.
Remittance to Emerging markets ($20.3 billion marked by 2014)

References :

Understanding Product Adoption Lifecycle of Mobile Wallets in India

Written by Siddharth