Mobile Wallets Adoption in India


Mobile wallets came into existence since the time Apple launched its mobile wallet capabilities. Banks, tech companies and retailers such as Paytm are all trying to gain and retain customer loyalty in mobile wallets.

Technology providers such as Google, Apple provide a great user experience and hence their mobile apps have higher rate of adoption than mobile wallets provided by banks. The reason behind this is that banks focus more on functionality aspect of mobile wallets and neglect the user experience aspect of it.

In this article, I attempt to take a dip into what is a mobile wallet, the product life cycle of the mobile wallet, drivers and barriers to adoption, and the pace of this adoption.

What Are Mobile Wallets

A mobile wallet is a way to carry credit card or debit card information in a digital form on mobile device. Substituting physical plastic card to make purchases, we can pay with our smartphone, tablet, or smartwatch.

Product Adoption Lifecycle

Let’s begin with finding the user base for the most popular mobile wallet Paytm. As per statistics of December 2016, Paytm had 147 million users of which 80 million were active users which represents around 30% of urban smartphone users in India and 23% of total smartphone users in India.

Hence , considering Paytm alone, we can state that adoption of mobile wallets in India in early majority phase. If we consider other mobile wallets, we can safely say that mobile wallets in India are under “early majority phase”.

Profiles of Adopters

Users of mobile wallets include innovators, early adopters and the early majority

Innovators (2.5%): These include test / beta users, and usually risk taking individuals. They make all (or at least a large proportion) of their expenditure through digital means, and are highly enthusiastic about new tech. They influence the rest of the market by sharing their feedback on the wallets that they use. They are largely not concerned about bugs and pain points, and are more concerned with the overall functionality of the product — the mobile payment process.

Early Adopters (13.5%): This segment also loves using new technology (but not to the extent that innovators do). On average, these users are younger and more affluent than those in the subsequent phases. They are normally interested in new features as and when they become available. Attention to pain points and bugs is more than for innovators, but it will not be their sole consideration when choosing to use a product.

Early Majority (34%): These users are looking for a polished end-product. Bugs and pain points will significantly influence their decision to use a product. Traditional features such as security take on a very high level of importance when the product reaches this stage of the life cycle. This can be seen by the sudden concern and demand for regulations in the mobile wallet space in the past few months.

Let’s look into the details of profiles of adopters of mobile wallet:

Innovators (2.5%):

Innovators are the risk taking individuals who keep track of latest technology adoptions and prefer digital means to make payments. They are not fixed upon the fact that product should live up to each and every expectation. They mention their experiences and opinions through blogs and influence the rest of the market.

Early Adopters (13.5%):

People falling under this category are also technology buffs though not as much as innovators. They are ready to try out new features and shortcomings of a product is not their only criteria while choosing a product. However, they are slightly more considerate about the pain points of a product as compared to the Innovators.

Early adopters of mobile wallets used to prefer Apple Pay over platforms such as Paypal. They demanded omnichannel capabilities and in-store payments in their mobile wallets.

Early Majority (34%):

Unlike Innovators and Early Adopters, Early Majority prefer a product which fulfils all their expectations. Talking about mobile wallets, security of online mode of payment has a high importance under this stage of product adoption life cycle. This is visible through the demand for regulations in the mobile wallet space in the past few months.

After demonetization, mobile wallets have completely moved to the Early Majority phase.

People working in IT sector are the ones who are weary about security through online modes of payment but are also more comfortable with digital modes of payment , hence looking for a combination of the two. These are the people who fall under the category of “Early Majority” for mobile wallets.

Factors and challenges which affected rate of mobile wallet adoption

1) Awareness — Many of the shopkeepers are not able to implement digital wallet because they are not aware of it or are not very comfortable with internet or mobile usage

2) Affordability of Internet Usage — Many shopkeepers and customers, especially those in townships and Tier 2 cities use 2G internet as it is cheaper and often 3G is not available. This does not always provide good connectivity due to which they prefer not to rely on such modes of payment.

3) Security — People belonging to previous generations are not very confident about security of online modes of payment.

Factors influencing growth of Mobile Wallets

1) Demonetization — Due to inconvenience related to cash and Government initiatives such as demonetization, mobile wallets are on a roll. Incentives are also being provided for use cashless means of payment.

2) Integration to give discounts — Mobile wallets have integrated with Ola, Uber, Restaurants and Shopping malls and offer special incentives for payment. This also gives more convenience

Mobile Wallet adoption in comparison with other payment methods

Internet Banking and Plastic Cards: Our parent’s generation have now gradually become comfortable with making online payments through internet banking feature provided by banks. Also, often looking forward to convenience, credit and debit cards as well , majority if internet users are moving towards buying stuff online and making payments through plastic cards

Entry of Banks: Banks have entered into UPI payments. Under UPI payments, a user can directly link himself/herself to a bank account. The transfer from one bank account to another can be made directly anywhere and anytime on an immediate basis.

Growth hacks used

Cash backs — Unique selling proposition of mobile wallets is “Cash backs”. This lures customers to purchase from mobile wallet sites instead of going for a purchase from eCommerce sites.

Collaborations — Mobile wallets have collaborated to provide bookings for movies and have associations with restaurants. Mobile wallets are also moving into travel industry and provide cash backs for frequent travellers


Any new innovation needs to go through five phases before it can reach mainstream adoption by consumers. The five phases are :-

1) Knowledge

2) Persuasion

3) Decision

4) Implementation

5) Confirmation

The customers for mobile wallets have already gone through first two phases.

Existing loyalty programs can be integrated with location-based smart phone application identification.

For example, a consumer enters a retailer outlet with the intention of making a purchase. The stores identify the customer and then query the company’s loyalty database, determine the consumer is redemption eligible, and send the consumer’s phone an instant message indicating she can redeem her rewards on her next purchase.

The customized treatment provides a compelling story the Early Adopter will want to share with her friends. Per Rogers’ Technology Innovation Lifecycle, the positive word-of-mouth ‘buzz’ will influence the Early Majority to more seriously contemplate mobile payments adoption.

All retailers and shopkeepers of Kirana Stores must be made aware about mobile wallets and its usage in daily transactions. People in the age group of 35 years -75 years old must also be made aware of mobile wallets. Mobile wallet retailers will have to improve upon security of the mobile wallets and will have to communicate to older customers about what the technology is and the process of its usage. Financial institutions, card networks, technology providers and retailers all must work together to facilitate mobile payments adoption.

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