India’s largest E-commerce player Flipkart launched digital wallet, Flipkart Money, while its arch-rival Amazon applied for a wallet licence with the country’s central bank. Amazon is also in the midst of scouting for potential acquisitions in the super buzzy payment space.

Away from their core commerce business of selling products online, domestic E-tailers are keenly looking to identify and capture areas like payments in an effort to shore up revenues.

The first bold move was made by Snapdeal, last year, when it bought Freecharge with the intent of creating a separate payments business.

The frenetic activity around payments among Indian Internet Companies is starting to look similar to what happened in the Chinese market with the likes of Alibaba’s Alipay, Tencent’s Tenpay and Baidu’s wallet leveraging their large user base to expand into payments and financial services.

While India’s e-commerce companies are, for now, looking at wallets only to help their shoppers get quick refunds and push cashless payments, it’s clear they are betting on customer adoption for other uses in the long run.

Today in China, Alipay and Tenpay jointly own almost 70% of the third party internet payment market, as per Fung Business Intelligence Centre, the research arm of the Hong Kong-based multinational Fung Group.

Besides, Baidu, Alibaba & Tentcent, online retailers like have built a significant play in the financial space online going far beyond just offering wallets.

E-commerce players in India are trying to learn from the experiences of Alipay in China. Most of the e-tailers here are looking to get a hold of the huge payments market by going through the mobile wallet route.

Data from the Reserve Bank of Indian Says the No of transactions conducted via Digital Wallets swelled to 153 million last year between Oct & Dec Compared to 65.9 million a year ago at the same time. In value terms, transactions worth Rs 5,539 Crore were made during this period compared to Rs 2,226 Crore a year ago. That explains the interest Digital Wallets are generating among internet players which may lead to a wider presence in payments & Finance for some of them. 

Innovations Needed

“Unfortunately, banks and payment companies haven’t done enough to keep up with the explosion in mobile growth with high failure rates on mobile. E-commerce players have been forced to solve the payments problem for their short term growth.

Payments is also strategic (eBay bought PayPal) because it gives tremendous data about users and merchants which can then be monetized to drive up profits of online retailers.

Large Companies with huge User numbers will play a pivotal role in sharpening the payments ecosystem, but innovation will likely be driven by smaller companies with no conflicts of interest”, says Vikram Vaidyanathan, MD at Matrix Partners.


“The Ola Money app is being used widely for mobile recharges across a range of operators. We will soon be facilitating ticketing and utility bill payments across online and offline merchants and through leading payment gateways” an Ola spokesperson says.

Finding More Uses

The bulk of the transactions that Digital Wallets like Paytm, Freecharge, Mobikwik and others make come from mobile recharges, followed by utility payments, both of which have small ticket sizes but high repeat usage. Pure play third party payments through wallets are yet to take off aggressively in India. Nowhere in the world has a digital payments platform been successful without strong anchor use case. The most obvious examples are that of Alipay and PayPal. But what’s important to note is that it’s really hard to get focus on a payments business if you are not running it like an independent company.

“Most big retailer-owned wallets have failed internationally, with the exception of china, while third-party independent wallets have flourished in emerging markets. We believe the Indian consumer will not accept a 15 year old concept of wallets. The future is in device fingerprinting where the consumer is recognised and the purchase is completed without an actual payment. The payment will be later completed at the consumer’s convenience as post-paid.” Says Amrish Rau, MD of Citrus Pay.


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