Mobile Wallets in India: Growth Opportunities

Mobile Wallets in India
Unbound Potential
Firas Durri

Mobile Wallets Mobile wallets will lead the way in digital payments
Product Growth Features that will drive growth in wallet usage
● Social Payments
● Instant Purchases
● Personalized Offers
● Balance Coupons
Market Growth Potential features for growth in various segments
● Consumer App
● Rural and Informal Economy
● Data and Finance
Conclusion Challenges and Opportunities
Overview

Mobile Wallets
Digital transactions are useful and
important
Traditional banking products are
outdated
Mobile wallets will lead the way in
payments

Moving beyond cash and paper instruments
“India uses too much cash for transactions. The ratio of cash to gross domestic
product is one of the highest in the world—12.42% in 2014, compared with
9.47% in China or 4% in Brazil.”
Digital transactions are necessary
Simpler, quicker, less expensive
Less corruption and risk, both in commerce and government
Enables online, distance, and recurring payments
Convenience in shopping and purchase experiences
Market GrowthProduct Growth ConclusionMobile Payments
(source)

Banks are outdated in today’s mobile era
IT Amazon, Heroku, Dropbox
Music CDs iTunes, Spotify, Youtube
Telephones Skype, Twilio
Taxi Dispatch Uber, Ola
Consumerization: infrastructure becomes data
Financial transactions can be
expressed as data
Then communicated over the
Internet or SMS
(source)

Reserve Bank of India (RBI) regulations
Mobile wallets emerge
Sources: TRAI, World Bank, Ericsson, Let’s Talk Payments
2009 Prepaid Payments Instruments
2014 Payments Banks
Bank Accounts Debit Cards
53% 22%
Mobile Phones Internet Access
79% 48%
More access to phones than to banks

Social Payments
Instant Purchases
Personalized Offers
Balance Coupons
Product Growth

Growth features provide 10x increase in growth segments, creating:
Growth Segments
ConclusionMarket GrowthProduct GrowthMobile Payments
OverviewProduct Growth
Funds
Products & Offers
New Users Merchants
● Social Payments
● Instant Purchases
● Personalized Offers
● Balance Coupons
Growth Features
Network Effects Activity and Retention Differentiation
Social Payments become more
more useful with each new user.
Offers targeting improves with
more data.
Funding the wallet balance
encourages usage across many
types of purchases and
payments.
Increasing Social Payments,
Instant Purchases, and greater
coverage in Products &
Merchants helps avoid
commoditization.
Social Payments

Encourage users to use the app for sending friends small amounts of money
● Quick funds for shopping, phone recharge or metro cards
● Splitting bills easily (one person buys movie tickets, the rest send their
portion to them on the app)
Building a map of social contacts (confirmed friends) in the app enables:
● Social shopping: share with friends that you’re going to this movie
● Social transactions: send money to a friend with a comment
This creates virality (sending invites to non-users to sign up for the app) and
social proof.
Send Money to FriendsSocial Payments

Gift Cards, a familiar idiom, enables people to send small payments to friends.
Displaying friend birthdays would encourage the adoption of Gift Cards.
Gift CardsSocial Payments
Sending Receiving
● Gift sender picks a value between
₹200 and ₹20,000
● Sender provides recipient’s phone
number (and optionally email address)
and personal message.
● We can partner with a provider to
send a physical card to the sender or
recipient.
● If recipient is already using the app,
send them an email, push notification,
SMS
● Otherwise try to send them an SMS
and encourage sender to notify them
that the gift awaits them in the app
● Show sender if the Gift Card has been
‘claimed’ or not

A Group Wallet in which a circle of friends or family can pitch in means
continuous money sharing in a specific wallet.
Use cases
● Parents enable kids to recharge phone balance, other simple purchases
● A group of friends pool money to use the wallet to fund a trip or outing
● A corporate fund for small purchases like food, stationery, etc.
Simple usage
● One person owns the wallet, adds funds, and adds or removes users
● Added users make the usual purchases, with this wallet as a fund source
Group WalletsSocial Payments

A logged-in user account has information like
phone number, wallet balance, and potentially
more information like location and other
preferences.
Using this information we can expand beyond
phone recharge to add more Instant Purchases.
Start with simple, dependable features
● Cab booking
● Movie tickets
Example: booking taxis from within WeChat
Instant Purchases
(source)

If cab booking and movie tickets are successful, expand Instant Purchases:
● Pizza and other food delivery
● Deal of the day
● Other controlled experiments using merchants with good logistics
If successful, scale up Instant Purchases:
● One click purchase for everything in the online or offline world
● Can buy anything based on a code recognized by our app
● Purchase items from TV or print (including tracking codes for referrals)
ExpansionInstant Purchases

Phone interactions that may eclipse “Apps”:
● Assistants: Siri, Google Now, Cortana, Alexa
● Messaging: Facebook Messenger, WeChat,
Slack, WhatsApp
● Notifications: smart watches, other devices
Instant Purchases can be integrated into the
assistant, messaging, or notifications.
Example: Lyft car ride booked from within Slack.
Future ReadyInstant Purchases
(source)

Personalized Offers are an entry point into further data-driven customization
and lead generation.
Initial personalized offers:
● Based on city
● Based on time or nature of day (lunch time, weekend, etc.)
● Based on past purchases (discount on a restaurant)
● Based on the price range of previous purchases
Improve data engine and analysis by seeing which offers are claimed.
Personalized Offers

Once Personalized Offers engine is working, offer longer term savings:
● Alternate providers for financial products (credit cards, insurance)
● Utilities (phone, gas, electricity)
● Savings tips
● Tools for generating receipts for reimbursements or taxes
This will build the data analysis tools to expand into personal finance and
potentially into the banking sector.
FinancePersonalized Offers

Balance coupons can be distributed without any
setup or hardware on the retailer’s part. People
who buy the coupons can enter the code in their
wallet app to add funds.
Good for customers who:
● Are young
● Don’t have bank accounts
● Don’t want to use online payments
Balance Coupons
(source)

Market Growth
Consumer App
Rural and Informal Economy
Data and Finance
Mobile Wallet Advantages

Wallet apps currently are currently gaining traction among urban consumers
who are economically middle class and above.
Use cases
● Convenience: purchases like phone recharge, bills, e-commerce, cabs
● Offers
● Expanding into in-store payments
Heavily marketed through offers: cashbacks, discounts, contests
● Drives ‘top line’ numbers: total users, transactions
● But may lead to activity without retention, a.k.a a ‘Leaky Bucket’
Consumer App

Merchant ExpansionConsumer App
Products and merchants that can be added:
● Digital payment on delivery (replacing cash on delivery)
● Metro cards, airplanes and trains, other travel
● Donations to NGOs, political parties, other crowdfunding
● Bulk purchases (Offers)
● Online services and digital products (courses, etc.), purchases in apps
● Vending machines and other automated machines
● Newspapers and magazines, anywhere this is a distributor in the middle
Bills
● Rent and other bills
● Government fees and other bureaucracies

To expand usage in informal economy:
● Support for multiple languages
● ‘Lite’ app or mobile site for low-end
phones
● Solutions for ‘no internet’ situations
(SMS, Phone calls)
● A way to withdraw the balance in cash
● Remittances
● Integration with government benefits
● Basic information services
Rural and Informal Economy
The app can enable payments for:
● On demand workers (delivery
people, etc.)
● Service economy
(housekeepers, etc.)
● Day laborers: carpenters,
plumbers, electricians, etc.
● Autorickshaw drivers, other
people offering quick services
for cash

Initial financial tools for people who use the app for purchases:
● Easy access to transaction history, invoices, receipts
● Group and corporate payments, expenses and reimbursements
Expanding into personal finance (like Mint.com)
● Spending analysis and suggestions
● Targeted offers and recommendations
● Simple ways to build savings
● Further financial services
Consumer SideData and Finance

Potential financial tools for Merchants:
Inventory and customer management
● Quick info on payments received, latest deliveries and receipts
● Loyalty programs
● Support for growth and customer flow
● Inventory management tools
Further services
● Financial programs to manage cash flow and liquidity for inventory
Merchant SideData and Finance

Mobile Wallet Advantages
For Consumers For Merchants
● Don’t have to share card details
● Don’t have to worry about change
● Don’t need to setup card hardware
● Simpler integration than gateways
● Alternative to ‘cards on file’
For all parties
● Safety: don’t have to carry cards or cash
● Fewer intermediaries requiring custom protocols, deals and paperwork
● Faster than clearing cheques
● Always available (no timing or location dependence)
● Can enable very small transactions and micropayments

Conclusion
Areas of Concern
The Story Unfolds
Unbound Potential

Regulatory
● Compliance, including Know Your Customer and Anti-Money Laundering
Consumer Protection
● Data usage and privacy, fees, processing times, purchase protection
Platform Risk
● Technology: Web, Phone OS (Android, iOS, others)
● Telecom networks
● Banks and other financial incumbents
Areas of Concern

“Fifteen years ago I was talking with venture
capitalists…They said: in China don’t even bother
talking about ecommerce, you guys don’t have
the business infrastructure for it…
Precisely because China’s business infrastructure
was poor back then, and because in China we
didn’t have this and that, when the internet came
we used the internet to really mature and
complete the business infrastructure.”
The Story Unfolds
Jack Ma, Alibaba Group(source)
(source)

Once mobile wallets have a firm footing in digital payments, they can move
both downmarket and upmarket.
Downmarket, they can expand into the informal economy and remittances.
Upmarket, they can disrupt the banking sector.
Firas Durri
firasd@gmail.com
twitter.com/firasd
linkedin.com/in/firasd
Unbound Potential

Mobile Wallets in India: Growth Opportunities

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