Wal­let Firms Throw in the Towel. Al­most

Many pre­paid wal­let cos are strug­gling to get ex­ist­ing users to trans­act more

The Economic Times - - Disruption: Startups & Tech - Surabhi.Agarwal

New Delhi: Af­ter a flurry of ac­tiv­ity with al­most two dozen com­pa­nies launch­ing pre­paid wal­lets in the last cou­ple of years, the ini­tial eu­pho­ria around wal­lets may be dy­ing down. Many play­ers — with the ex­cep­tion of dom­i­nant Paytm or Snapdeal-owned Freecharge — con­cede that the num­bers of wal­let users is stag­nat­ing and com­pa­nies are strug­gling to get ex­ist­ing users to trans­act more us­ing their dig­i­tal money.

While no one has called it quits so far, even play­ers with sig­nif­i­cant num­ber of wal­lets such as PayU Money and Citrus told ET that they are not ag­gres­sively push­ing their own wal­lets any­more and are un­abashedly align­ing with ri­val wal­let firms.

“The pre-paid wal­let story is an ex­tremely weak story,” Nitin Gupta, CEO of PayU Money told ET. The In­dian fi­nan­cial ser­vices mar­ket is hugely un­der­pen­e­trated and the op­por­tu­nity is very big. “EWal­let be­came the back door en­try route for com­pa­nies into fi­nan­cial ser­vices, but they are re­al­is­ing now that not many peo­ple are in­ter­ested in it,” said Gupta.

The RBI gave li­cence to op­er­ate pre-paid wal­lets to around 26 en­ti­ties and the last two years have seen a flurry of launches from or­gan­i­sa­tions rang­ing from Ola to con­glom­er­ates such as Spice group to sev­eral bank­ing and fi­nance firms.

PayU has al­most over 8-mil­lion ac­tive wal­lets, but Gupta ad­mits that there is hardly any money in them. The use case of wal­lets may be lim­ited since most peo­ple use credit card, debit card or net­bank­ing to fill their wal­lets to trans­act at on­line por­tals or off­line stores which also ac­cept cards. Vish­was Pa­tel, CEO of CCAv­enues said that firms such as Freecharge which have a cap­tive au­di­ence in terms of ecom­merce buy­ers or ones that have won a pay­ment bank li­cence like Paytm may be bet­ter po­si­tioned to op­er­ate in this space.

“Stand­alone play­ers who of­fer a mere wal­let are re­ally strug­gling to grow them­selves and gen­er­ate rev­enues,” said Pa­tel. He added this is the rea­son why most wal­let firms are now ex­pand­ing into of­fer­ing credit or wealth man­age­ment ser­vices.

ET had re­ported ear­lier that Mo­biKwik has started a pi­lot for ex­tend­ing short-term credit to its ex­ist­ing cus­tomers and is in talks with banks for en­abling small sav­ing through FDs or mu­tual funds.

Ex­perts warn of in­creas­ing pres­sure in this space, es­pe­cially for stand­alone wal­let firms, with the up­com­ing pay­ment and small banks that could also lead to con­sol­i­da­tion in this space. Am­r­ish Rau, MD, of Citrus Pay­ments So­lu­tions, which also had sub­stan­tial num­ber of wal­lets at around 2 mil­lion said that pre­paid wal­lets have not suc­ceeded in In­dia. “Wal­let was nei­ther a bad idea, nor a good idea, it was just an old idea,” he said, adding that the con­cept was started by Pay­Pal in 2001 in the US.

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