Opportunities on Offer in India’s Burgeoning Digital Payment Sector

February 10, 2017
Indian Finance Minister, Arun Jaitley, used last week’s 2017 budget speech to signal his government’s commitment to boosting the country’s digital economy. Following on from last November’s demonetization of India’s two highest value currencies, the budget outlines a number of measures to facilitate a transition towards a more cashless society. In a nation where 89% of consumers use cash as a primary mode of payment, there is now a golden opportunity for digital alternatives to cash.


Demonetization Makes Digital Payment the Path to a Cashless Society

The Indian government’s demonetization of all INR 500 and INR 1,000 banknotes essentially removed 86% of the currency in circulation. A daring policy, it was introduced as a means to target tax evasion, counterfeit notes and terror financing.

The seismic impact of demonetization has prompted many citizens to search out digital alternatives to cash. Figures from the Indian government indicate that the number of transactions per day carried out through e-wallet solutions – like Oxigen, Paytm and MobiKwik – rose from 1.7 million on the day demonetization was announced to 6.3 million one month later.


What the 2017 Budget Means for Digital Payment

The ‘Digital Economy’ has been set out as one of the ten main tenets of the 2017 budget and is sure to be a key priority for the Indian government over the next twelve months.

Incorporating both policy and budgetary initiatives, the raft of measures outlined includes money-back incentives for merchants and bonus schemes for consumers using the government-supported Bharat Interface for Money (BHIM) app. This mobile wallet harnesses a twelve-digit unique identification number known as an Aadhaar, which is assigned to all residents of India.

To bolster the card acceptance infrastructure, the government has set the target for acquirers in India to roll out 1 million new POS terminals by March 2017. This will address the fact that the country presently has the lowest POS terminal penetration in the world – 693 machines per million users.

The government has further demonstrated their commitment to promoting digital payment by indicating that petrol pumps, fertilizer depots, municipal and transport offices, as well as universities, colleges and hospitals will have to accept digital payments.


Moving in the Right Direction

A report by Google and Boston Consulting Group suggests that the total payments conducted via digital payment instruments in India will be in the range of USD 500 billion by 2020 – roughly a tenfold increase on current levels.

The same report forecasts significant growth in smartphone and Internet use, which will further assist the development of digital payment. 90% of all devices are expected to be Internet-enabled by 2017. The Indian edition of the Ericsson Mobility Report estimates that smartphone subscriptions will increase to 810 million by 2021.


Opportunities for In-Person Payment Acceptance

Demonetization and the government’s commitment to digital payment in a country with such a high dependency on cash has created an opening for technologies that provide a digital alternative to face-to-face cash transactions.

Giving anyone the power to accept a contactless payment from a card or mobile wallet using their smartphone, Mobeewave’s technology provides a secure and convenient replacement for in-person cash transactions.

Such a solution would be particularly useful for Indian micro-merchants and independent workers. A MasterCard study states that there are 59.16 million micro-merchants in India. These include service providers or small-scale retailers across a range of industries – anything from food and beverage providers, private cab drivers or construction contractors. The same MasterCard study estimates the potential size of this market to be approximately $3.5 billion (USD) weekly.

Mobeewave’s technology would also facilitate peer-to-peer in-person money transfers – giving users the ability to collect money from anyone with a single tap of a contactless card or mobile wallet. In an increasingly cashless society, this would provide a practical solution for sharing costs with friends and family, paying people back or selling items second hand.


Upcoming Posts to Present Potential Use Cases

Having only scratched the surface of the growth of digital payment in India, we will return to this topic in future posts. In particular, we will present potential use cases and applications of Mobeewave’s technology as a digital alternative to in-person cash-in-hand transactions.



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