Bengaluru: The Indian m-wallet market is expected to grow at a compounded annual growth rate (CAGR) of 141 percent to reach Rs 30,000 crore by the end of 2021-22, a study said.
The growth, during 2015-16 to 2021-22, would be driven by growing usage of smartphones, robust mobile internet penetration, growth of e-commerce sector together with increasing disposable incomes, said the study by the Associated Chambers of Commerce and Industry of India and research firm RNCOS.
The Indian m-wallet market in 2015-16 was around Rs 154 crore.
It is also anticipated that the market value of m-wallet transactions in India will grow at a CAGR of 154 percent during FY16 to FY22, and reach Rs 55 lakh crore from Rs 20,600 crore, the study titled Indian m-wallet market: Forecast 2022 said.
M-wallet transaction is among the fastest growing paperless modes of payment or banking, and it is expected that the majority of transactions will go paperless in the next 10 years, it said.
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 percent share, followed by recharge and bill payments for mobile, DTH, landline, electricity and other such services (31 percent share).
The remaining share of 31 percent is captured by online shopping, hotel/travel/movie ticket reservations, online food order, payment of insurance premium, recharging Metro rail card and others.
While mobile wallet service contributed to 21 percent share in mobile payment volume transactions in FY16, its share is expected to increase to 79 percent by FY22, the study said. However, it said the Reserve Bank of Indias licensing 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," it said. Besides, for all the entities (including banks, non-banking finance companies, telecos and others) to operate any kind of m-wallet, there are "copious strict" RBI policies which encumber the growth of m-wallet sector, it said.
"The RBI should relax its current policies and allow cash withdrawals from the semi-closed wallets," it suggested.
The study cited consumers mindset as the biggest factor that hinders the growth of Indian m-wallet market, as they are more skeptical about the safety and security issues, as in the case of internet banking, as users worry that their devices could be hacked or attacked by some kind of virus.
Also, often people complain that their money has been debited but the transaction got declined while transacting via mobile, and to avoid such problems users keep away from using mobile wallet related services, it added.
Privacy is another issue, as for all kinds of monetary transactions and other such services, one needs to disclose his/her identity.
With a view to win customers trust, companies operating in the mobile-wallet sector should take measures like providing effective, completely secure, private and reliable services, 3-D or OTP (one time password) security options, data back-up system and others to spread awareness among people, the study said.
Crystal clear policies and a common regulatory body for all m-wallets (closed, semi-closed and others) are required to bring clarity in procedures and policies, it said.
"A strong authentication mechanism must be put in place to bind the identity of the user to the authorisation of the transaction thereby being extremely mindful of authentication and risk assessment," Assocham Secretary General D S Rawat said while releasing the study.