Mobile Wallets in India: A Harbinger of Things to Come?
The expression “cash is king” has been around for generations, but it may soon be a thing of the past. Simply put, electronic forms of payment are becoming increasingly popular — and they’re showing no signs of stopping.
Over the last five years, mobile wallets have surged in popularity and are sometimes serving as substitute bank accounts — often for people who don’t have access to them, especially in rural areas. In this day and age, multiple options exist for consumers: Apple Wallet, PayPal, Amazon Payments, Google Wallet, Venmo and, more recently, PayTM. Everyone from the e-commerce giants of the world to the Bahraini government are now allowing people to store their money directly where they shop the most — which is great news for e-commerce.
PayTM’s Impact on India
PayTM, an Indian electronic payment and e-commerce company that launched in 2010, has led the charge in India to switch from traditional banks to mobile wallets — connecting millions of India’s rural citizens to the realm of e-commerce.
PayTM has surged in popularity since last November, when, in an attempt to clean up corruption and push more citizens into modern banking and payment systems, the Indian government banned approximately 86% of the country’s notes in circulation. For weeks, while the old and new currency were exchanged, people literally didn’t have money to buy essentials. PayTM seized the opportunity and reached out to shop owners across the country — many of whom didn’t even take credit cards — with impressive results. Now, PayTM is accepted at five times as many places as credit cards and has amassed an impressive 225 million active users.
In addition to providing Indian citizens with another form of payment, PayTM offers them the opportunity to monitor money in their account via a mobile device. The app offers everything from bill payment, online shopping, wallet, TV payments and cell phone payments. Although the majority of Indian citizens don’t keep their money in banks, just about everyone has a cell phone — more than 1 billion cell phone plans are active in the country. PayTM is a full circle bank-to-shopping application that’s connecting millions of previously “unconnected” Indians to the realm of e-commerce.
The Alibaba Connection
This year, India exceeded 300 million smartphone users, growing 18% YoY. Smartphones are the modern-day Swiss Army knives in peoples’ pockets, and they’re opening more than just a few doors for the Indian population.
PayTM allows the rural farmer who’s never had access to traditional banking a means of not only storing money but also connecting to the convenience of e-commerce. PayTM has been very successful in India, but it didn’t get to this point on its own. A year before the Indian government transitioned its currency, PayTM received a strategic $575 million investment from none other than Chinese e-commerce giant, Alibaba.
With Alibaba’s guidance, PayTM is now India’s second most valuable startup and is proving to be more popular and convenient than credit cards with the Indian population. PayTM has captured the full circle of consumer cash exchange, providing money storage and shopping all in the same place. This makes us wonder… what are other e-commerce giants doing to keep up? What’s the next step for eBay, Amazon and Walmart? What is the future of payment systems like mobile wallets versus traditional banks?