Mobile Wallets in IndiaUnbound 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Traditional banking products are outdated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 necessarySimpler, 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 Growth Product Growth ConclusionMobile Payments

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Banks are outdated in today’s mobile era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

Market Growth Product Growth ConclusionMobile Payments

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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

Market Growth Product Growth ConclusionMobile Payments

Social Payments

Instant Purchases

Personalized Offers

Balance Coupons

Product Growth

Growth features provide 10x increase in growth segments, creating:

Growth Segments

ConclusionMarket Growth Product GrowthMobile Payments

OverviewProduct Growth

FundsProducts & 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

ConclusionMarket Growth Product GrowthMobile 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

ConclusionMarket Growth Product GrowthMobile 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

ConclusionMarket Growth Product GrowthMobile 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

ConclusionMarket Growth Product GrowthMobile Payments

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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

ConclusionMarket Growth Product GrowthMobile Payments

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

ConclusionMarket Growth Product GrowthMobile Payments

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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

ConclusionMarket Growth Product GrowthMobile Payments

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

ConclusionMarket Growth Product GrowthMobile Payments

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

ConclusionMarket Growth Product GrowthMobile Payments

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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

ConclusionMarket Growth Product GrowthMobile Payments

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

ConclusionMarket Growth Product GrowthMobile Payments

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

ConclusionMarket Growth Product GrowthMobile Payments

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

ConclusionMarket Growth Product GrowthMobile Payments

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

ConclusionMarket Growth Product GrowthMobile Payments

ConclusionMarket Growth Product GrowthMobile Payments

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

ConclusionAreas 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

ConclusionMarket Growth Product GrowthMobile Payments

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)

ConclusionMarket Growth Product GrowthMobile Payments

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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.

ConclusionMarket Growth Product GrowthMobile Payments

Firas Durrifirasd@gmail.comtwitter.com/firasdlinkedin.com/in/firasd

Unbound Potential