What does it take for e-wallet providers to stay in the game?

Shreya Sinhamoneycontrol.comIt is easier to understand why e-wallet payments are catching on fast in India. More people own smart phones now and are becoming tech-savvy. And e-wallet providers are fighting it out among themselves to grab more of this market share. They realise that the key to their survival will be the unique value proposition they offer. A few of them have tried to distinguish themselves from the crowd.

For example, Paytm (with 100 million users) and Mobikwik, are probably the only wallet companies that support bookings on IRCTC. MobiKwik also accepts payments on behalf of BookMyShow, MakeMyTrip, Domino's Pizza, eBay, among others, and also offers a doorstep cash collection service. Similarly, Delhi-based Payworld has tied up with online Capital Float, an non-banking finance company, which gives loans to small and medium merchants for an easy credit experience. Praveen Dhabahai, COO of Payworld in an interview to moneycontrol.com said: "We are more concentrated on the unbanked population who are likely to continue using our assisted medium for fund transfers.”

A recent media report on how a gang looted money using an e-wallet service provider has put the spotlight on fool-proof technology. Credit or debit cards provide 3D secure passwords, whereas digital e-wallets lack this feature.

Zeta, a small player in the e-wallet space, believes cutting-edge technology is crucial.

Bhavin Turakhia, the CEO of Zeta, in an interview to moneycontrol.com said: "Our applications originate from advanced technologies that are 100 percent encrypted, which we keep upgrading on a regular basis."

Mobikwik’s co-founder and director Upasana Taku has ensured the company is ring-fenced properly. She said: "Our systems discover fraud accounts or suspicious user behaviour, following which concerned wallets are temporarily disabled. The automated process has an accuracy rate of over 99 percent.”

The disabled wallets are unlocked only after the user is manually validated. In case a user loses his or her smartphone, access to the MobiKwik account can be blocked after a call to the customer care team. The government recently launched Unified Payments Interface (UPI) and 10 banks have signed on. Two people can transfer money using an unique virtual address under this system. This will have a higher level of security. Even if the merchant’s account is hacked, their database will have only a list of virtual addresses -- no real names or bank account numbers. E-wallet providers create a merchant account and keep the customer's money until it is transferred to the merchant. And, some believe, UPI would take the business away from e-wallet providers. Dhabahai of Payworld thinks that in the short-term UPI will not pose a challenge.

Taku is more sceptical: "UPI works as an excellent backend infrastructure. However, certain questions remain unanswered. For example, it's unclear how the front-end would work for the users. Who would design it, tying in the various, existing bank interfaces, apps, and properties? Will it be effective? Without delivering a great user-experience, frictionless consumer adoption of UPI is unlikely."

Technology updates, and competition will keep e-wallet providers fighting to stay in the game. According to a PwC India report, the country has 150 million smartphone users and it is expected to go up to 500 million in five years. The mobile wallet market is estimated to grow at 30 percent from 2015 to 2019. And e-wallet providers will want a slice of this pie.