The Indian mobile-wallet market will grow at a compounded annual growth rate (CAGR) of 141% to reach INR300bn by the end of FY2022, according to a study by the Associated Chambers of Commerce and Industry of India and research firm RNCOS.
The study titled 'Indian m-wallet market: Forecast 2022' suggests that during 2015-16 to 2021-22 the growth will be driven by growing usage of smartphones, robust mobile internet penetration, and growth of e-commerce sector together with increasing disposable incomes.
It is also expected that the market value of m-wallet transactions in the country will grow at a CAGR of 154% during FY2016 to FY2022, and reach INR55 trillion from INR206bn.
The report added that m-wallet transaction is among the fastest growing paperless modes of payment or banking, and majority of payments will go paperless in the next 10 years.
M-wallet market is segmented into three broad services: money transfers from wallet to wallet, bank to wallet and vice versa which accounts for 38% stake; followed by recharge and bill payments for mobile, DTH, landline, electricity and other such services for 31%.
The remaining 31% share is captured by online shopping, hotel/travel/movie ticket reservations, online food order, payment of insurance premium, recharging metro rail card and others.
In FY2016, mobile wallet service contributed 21% share in mobile payment volume transactions, and its share is expected to surge to 79% by FY2022, the study said.
It further cited that Reserve Bank of India (RBI) licencing regime is discouraging mobile wallet growth in the country. “The present system allows only e-transfer of money and approves semi-closed prepaid instrument issuance while it does not allow ‘cash out’ from the semi-closed wallet.”
Besides, for all the entities including banks, non-banking finance companies (NBFCs), telecos and others to operate any kind of m-wallet, there are copious of strict RBI policies which encumber the growth of m-wallet sector.
“The RBI should relax its current policies and allow cash withdrawals from the semi-closed wallets,” the study suggested.
It said that consumer’s mindset is the biggest factor that hinders the growth of Indian m-wallet market.