Mobile wallet growth slumps: Will it ever reclaim lost market?

Mobile wallet

Mobile wallet companies suffered the biggest blow when the Reserve Bank of India (RBI) made full Know Your Customer (KYC) mandatory for their users. The decision by the RBI was widely criticised by industry experts and the industry body Payments Council of India (PCI) also requested the central bank to look into the issues plaguing the industry.

It is uncertain whether the entire 500 million mobile wallet users, registered across Paytm, Mobikwik, Amazon Pay, PhonePe and others, will update the KYC details and resume wallet payments.

Three months after the end of the deadline, which was on February 28, RBI has given numbers which shed light on the current status of mobile wallet payment industry.

In April this year, mobile wallets showed 279 million transactions against 268 million in the previous month. The number is, however, still lesser than 310 million transactions wallets clocked in February, before the end of full KYC deadline, according to RBI.

The aforementioned number is far less than 320 million transactions clocked in April last year.

Though the RBI didn’t release any data on the total value of transactions clocked in these months, a data and analytics company Global data projected a higher growth value late last year.

In October, GlobalData released a report and said that the total amount of mobile wallet transactions in India will reach up to Rs 800 billion by the end of 2017, a growth of 113 per cent from the previous year. It is slated to grow further to surpass Rs 1 trillion mark in 2018.

Amidst this, digital payments companies have shifted their strategies from mobile wallet to UPI. For instance, Paytm is no more interested in claiming higher numbers of wallet transaction, it is rather engaged in a battle with PhonePe in UPI transactions.

The UPI-based metrics for February given by NPCI reveals that Paytm had facilitated 68 million transactions in February while PhonePe accounted only 28 million.

Meanwhile, the total value of  UPI transaction by all apps stood at Rs 19,126 crore out of which PhonePe has a share of 5,120 crore.

Since its inception, Unified Payment Interface (UPI)–an inter-bank transaction facility developed by National Payments Corporation of India (NPCI) has been witnessing a continuous growth.

The volume of the transaction recorded by UPI for the month of May reached 189.48 million. However, the number of the transaction was a marginal decrease as compared to 190.08 million transactions in the preceding month.

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