You can buy yourself a fine cup of tea at a neat roadside stall for as low as Rs 10 or even Rs 5, but chances are high that you go to an Udipi joint, a Chaayos, a Cafe Coffee Day or even a Starbucks for a chai, because you can find something in addition to just the refreshing brew. Understanding this will make it easier for you to know what will happen to mobile wallets after the announcement that you can soon transfer money by WhatsApp to another user.
By no means does the arrival of WhatsApp sound a quick death knell for mobile wallet companies such as PayTm, MobiKwik or PhonePe, who might have other aces up their sleeves, but those wallet companies that are or were lazy enough to think that mobile wallets was all about zapping money from one phone to the other and little more are bound to feel the heat.
The focus will increasingly be on value-added services and bouquet offerings with mobile wallets that may go much further than just transfer of money. PayTm already has a virtual mall on your wallet through its app and more important, owns a payments bank. Airtel Money is closely connected to its payments bank. PhonePe has been looking for a strategic partner in Freecharge, which has already been sold to Axis Bank. MobiKwik, in which Bajaj Finance is already an investor, is offering virtual Visa prepaid cards in partnership with IDBI Bank in addition to consumer-friendly cashback tie-ups the likes of Domino's Pizza and BookMyShow.
You get the picture. Deep dive further, and there is a future waiting for you based on data science. Mobile wallets are like doorways into your behaviour for the companies that want to make money off your habits, preferences and choices. The more they know you (or snoop on you), the more they can tap into your behaviour or location or age or whatever to offer you something that will help them profit from backend partnerships.
Like, if you are 20 and this is Valentine's Day week, the mobile app will tempt you with an offer to buy chocolates or teddy bears. Say you are 60 and Hindu, and they might just offer you a trip to Mount Kailash if you are saluting the Lord in the week of Mahashivaratri.
Increasingly, convergence between mobile wallets, payment banks and e-commerce companies will see this game play out -- and in fact, the game has already begun.
What Facebook-controlled WhatsApp can do, however, is to possibly look deeper into your behaviour than others. If you are frequently on WhatsApp, Instagram and/or Facebook, the chances are higher that the company knows more about you than the other mobile money companies.
Imagine a future when a young man has a fight with his girlfriend on WhatsApp and some advanced data-science software spots the anger-related words to flash a diamond ring offer to the man (assuming expensive gifts don't change with the arrival of the digital age).
PayTm, which has more than 280 million users, is bound to use some of the brand advantage that it built up thanks to its perfectly timed strategy to woo the masses during the days and weeks after the 8 November, 2016 demonetisation of high-value rupee notes by the Narendra Modi government because WhatsApp already has upwards of 200 million users in India.
But its back-end partnerships and new ideas are already in place, giving it a headstarte. For instance, it plans to sell insurance and mutual fund products.
Think of PayTm now like what Chaayos might be to a chaiwala on the street. By offering flexible customisation for its basic cup of tea (you can add ginger, black pepper and/or other spices and also change the milk content), Chaayos is inventing an upscale variant of the roadside brew. PayTm is trying to do something similar with mobile money, but must do even more it is to stay ahead of WhatsApp.
WhatsApp is simply trying to ride a wave based on government regulations -- just like Reliance Jio did in expanding its data services.
Jio capitalised on the fact that verifying a customer under know-your-customer (KYC) regulations became easier with the proliferation of the Aadhar, the unique identification number and card. WhatsApp is betting on the tie-up between Aadhar and mobile numbers and the Unified Payments Interface (UPI) launched by the government. But remember, Reliance also has a group payments bank in the works in addition to JioMoney and has an accompanying retail strategy in place (not to speak of media content).
JioMoney in turn has a partnership with PhonePe. So the game has already gone well beyond vanilla money transfer. However, WhatsApp is bound to breathe down the necks of others because on current reckoning, it appears to be in a better position to snoop on your intimate chatter.
What we will see increasingly in the coming days is a competitive landscape in which value-added services will be driven by two things: deep insights into consumer needs and behaviour on the one hand and a web of back-end partnerships that will make fulfillment and innovation possible on the other. A shakeout is inevitable but the game has just begun.
(The writer tweets @madversity)
Updated Date: Feb 13, 2018 17:00 PM