While mobile wallets have been the buzzword in tech since last year’s demonetization, their honeymoon period might just be nearing its end. One, cash has returned to the system. And two, customers are becoming more aware of the security and privacy risks surrounding digital transactions. Latest data from the country’s financial regulator RBI reveals that mobile wallet transactions declined by 10 million in the month of August. As a result, overall prepaid payment instruments (PPI) transactions for the month were down by three percent, Medianama reports. Also Read - Google Pay will not charge transfer fee from Indian users; Google India clarifiesAlso Read - Google Pay to remove payments on web app, adds fee on instant money transfers
Mobile wallet transactions slipped 4.3 percent month-on-month to 225.4 million in August. However, on a year-on-year basis, they were up 219 percent, thanks in no small measure to November 2016’s demonetization that changed the entire fin-tech narrative of India. The amount transacted also grew 4.7 percent month-on-month to Rs 7,262 crore, and was up 136 percent to Rs 3,074 crore from a year ago. This essentially implies that lesser people are transacting now, but more money is flowing through the ecosystem. ALSO READ: Google Tez: The latest UPI app in India launches with mobile wallet and payments service Also Read - Paytm announces Rs 10 crore fund for its new Mini App Store developers
A recent report by Deloitte stated that mobile wallet transaction volume is expected to touch 32 billion by 2022, and transaction value will grow to Rs 32 trillion by that period. As smartphone and internet penetration increases, more people would naturally be inducted into the system. And mobile wallets are doing their bit lure customers with attractive offers, more point-of-reach as well as ease of use. All popular wallets, including Paytm, PhonePe, Mobikwik, Ola Money, Jio Money and others are also spending heavily on marketing and advertising their services. ALSO READ: PayPal seeks license for mobile wallet in India: Report
However, RBI’s recent guidelines that require mobile wallets to make all their customers KYC-compliant might cause some roadblocks in customer acquisition in future. There are millions of people who use mobile wallets but haven’t completed Aadhar-based KYC verification. Moreover, the government’s proposal to levy a digital security cess on every transaction could demotivate people. The cess is being considered to make digital transactions more secure and the government plans to create a fund to set up “cyber-forensic labs” across the country. All digital payments companies might also be mandated to incorporate a software that helps detect suspicious transactions and sends out alerts to customers.