Mobile wallet transactions in India are on pace to grow at a CAGR of a strong 160% through to 2022 to reach 260 billion, new research indicates.
A joint study conducted by The Associated Chambers of Commerce & Industry of India (ASSOCHAM) and business consulting firm RNCOS shows that these gains are being driven in large part by growing usage of smartphones.
Other factors behind the rapid growth include robust mobile internet penetration, growth of the e-commerce sector and increasing disposable incomes.
The study shows that following India's 500 rupee and 1,000 rupee banknote demonetization, the average wallet spend for retail witnessed a huge jump in 2016 and is expected to increase from 500 to 700 rupees ($7.35 to $10.30) to between 2,000 and 10,000 ($29.40 to $147.10) in the near term.
The mobile wallet market in India has also benefited greatly from demonetization and its share in the total mobile payment volume transactions is likely to rise from 20% in FY16 to 57% by FY22.
“The government has hinted of not demonetizing all of the scrapped currency and aims to fill the gap by promoting digital/cashless payments. This is bound to further boost prospects for the m-wallet sector in India,” said ASSOCHAM’s D.S. Rawat at a press conference.
Taking over traditional payment modes, the m-wallet market in India is forecast to reach 1,512 billion rupees by FY22.
The study, however, said that it is a challenge for the sector to bring the number of shoppers preferring cash on delivery (COD) and other modes of payment to the m-wallet platform.It therefore recommends that companies operating in the mobile wallet sector should implement measures to provide effective, secure, private and reliable services such as 3D or OTP (one-time password) security options, data backup systems and others.
“A strong authentication mechanism must be put in place to bind the identity of the user to the authorization of the transaction thereby being extremely mindful of authentication and risk assessment,” the study suggested.
As the mobile payment space evolves, the stakeholders are also advised to create secure transactions that foster consumer trust.