The mobile payment business in India is becoming a crowded field as millions of Indians are ditching cash in favor of mobile-payment apps. The move coincides with the government’s decision to take nearly 90 percent of its currency out of circulation in an effort to curb corruption. Is India ready to go cashless?
Shweta Bajaj reports from New Delhi.
The mobile payment market in India is cashing in after the Indian government’s sweeping decision to ban certain denomination currency last year.
With long lines at ATM’s and withdrawal limits at banks, Indian digital wallet company, Paytm, saw an opportunity. People had little choice but to use mobile payments because of the acute cash shortage.
“Today, you don’t need to tell people about this app, Paytm. Everyone already has it. Even milkmen, drivers, everyone knows about it because the transition happened very easily because people were forced to use it,” said vendor Amit Sharma
Paytm, backed by Alibaba, saw a sharp rise in online payments replacing cash transactions. The increase has enticed companies like Google’s Tez to enter the Indian digital payment app market.
Apple is also looking at launching its mobile payment app – Apple Pay – in India, but it’s a crowded market already with many Indian companies vying for some of the bottom line.
According to one report, by 2020, at least half of all online buying in India will take place on a mobile device with consumers spending more than 50 billion dollars in the next five years.
But in a country where people have still not transitioned to using debit and credit cards, cashless India remains a dream.
“We are not even close to go even cashless society. In 1947, India was the country of 300 million people, today we are the country of around 300 million illiterates. They can’t even read what is on their mobile phone. Don’t expect them to go suddenly cashless,” said economist Sanjay Mahrotra.
Research by one consulting agency in India shows that the number of people using mobile wallets increased by only nine percent between July and September this year. The previous quarter increase was 24 percent, an indication the pace of growth is slowing down.