The digital wallet space in India is witnessing significant traction, driven by the government’s thrust towards digital payments and a cashless economy. While the wallet players are innovating their offerings in a big way to enhance uptake, several challenges have to be addressed in order to create a well-developed ecosystem. In the session, “Digital wallets: A new trend for developing India”, at Convergence India 2017, industry experts shared their views on the emerging landscape for digital payments in India, the key trends and the future outlook…

Ishan Guliani, Vice President, Engineering, AppLop, India

Focus on wallet-less transactions

In India’s context, it is important to move beyond the competition in the wallet space and align with the broader objective of digitising the country. Instead of looking at rival wallet players or digital solution providers as competition, an interoperable approach is the need of the hour.

The focus should be on how easy it is for a merchant to adopt the system. AppLop focuses more on working with small and medium enterprises or small shop owners; we are very passionate about getting them online. In addition to assisting them with payments, we make applications for them.

In a bid to empower small merchants and make them a part of the digital society, we are providing them with customer relationship management solutions in conjunction with our digital payment application “Rupiya”. It is not a traditional digital wallet but a bank-to-bank transfer mechanism, which enables them to transact directly to their bank accounts. It provides an instant wallet-less payment gateway. A customer can use a credit card, a debit card or net banking for availing of this service.


“Going forward, a focus on interoperability among various digital wallets is key.”

Focus on bank-to-bank solutions

A lot of people are not very comfortable with keeping a huge sum of money in their e-wallets. Our data analysis shows that in the past four months, especially after demonetisation, the majority of the merchants transferred their money from their wallets into bank accounts using our platform. They are sceptical about letting their money remain stored in digital wallets. In such a scenario, our bank-to-bank solution can address this scepticism. Also, the National Payments Corporation of India’s (NPCI) BHIM app, based on the unified payment interface (UPI), will give a significant push.

Wallets are definitely here to stay as they have their own benefits in shaping the nation, but bank-to-bank solutions are an upcoming trend that needs to be explored. Several banks such as Yes Bank, RBL Bank and ICICI Bank have come up with application programming interface (API) solutions. These solutions, developed by young start-ups, will provide a fillip to the bank-to-bank solution-based ecosystem.

Going forward, a focus more on interoperability among various digital wallets is key. It is important for all the wallets and payment solutions to come together under a master application, which weaves in security, payment and other applications – all in one product.

(AppLop is a mobile first offline-to-online enabler and provides a host of application-based solutions in the financial technology domain. It assists business owners in providing text-based solutions, digital marketing and payment integration solutions. The company currently has 6,000 merchants across India using its payment gateway and applications.)

Digitising the retail payment market

Sunil Kulkarni, Deputy Managing Director, Oxigen Services India Private Limited

People today utilise all modes of money transactions including mobile wallets, credit cards and debit cards. They can be called deal-hunters as their loyalty to a particular wallet is limited to the cash-back and other freebies offered.

The current online scenario is such that when customers buy anything online, they go to the shopping cart, after which they have the option to choose from several payment modes including mobile wallets, credit/debit cards, net banking (a large portion of which will get replaced by UPI) and cash on delivery. On selecting one of the online payment options, the user gets directed to a payment gateway, which serves as a point-of-sale (PoS) terminal in an online environment.

India currently has about 30 million physical merchants but only 1.5 million PoS terminals. Most of the big brands such as Lifestyle, Shoppers Stop and Big Bazaar have more than one PoS terminal. This indicates that a large community of merchants continue to operate in offline payment mode. There is a need to put in place an electronic payment infrastructure for these merchants.

“There is a need for establishing PoS infrastructure and converting that into a profitable business case for merchants.”

Oxigen has been working towards making this a reality. We have brought off­line merchants online through the provision of over-the-counter purchases, which are similar to online purchases. Wh­en users buy a product, they get the option of paying by cash, debit/credit card, mobile wallet and even by the biometric-based Aadhaar mobile payment system. In such a transaction, when the user sees the payment options, the shopkeeper is not the merchant; instead, Oxigen is the merchant as it aggregates all the bill payment services that allow a payment to go through. Further, for this transaction, the merchant also gets paid.

Today, even banks are being brought into merchant locations. If a village is 12 km away from the bank branch, the cost of going to the bank for depositing cash becomes very high. We are trying to bring the branch to the merchant. The Aadhaar-enabled payment system allows cash-in and cash-out facility, using the same PoS that currently does debit/credit card transactions.

Thus, there is a need for establishing PoS infrastructure and converting it into a profitable business case for merchants. The need of the hour for digital wallets is not just bringing in cash-backs, but to use these merchant points as well. The growth will happen when we bring offline customers online, by first digitising the retail payment market.

(Oxigen has grown from a recharge bill payment company to an integrated recharge bill payment, money transfer and payments solution provider. It connects over 200,000 customers through touch-points in retail and does more than 60 million unique transactions in a month. Oxigen’s service portfolio includes Oxigen Wallet, which is an innovative payment mechanism and prepaid wallet accepting payments online and on mobile.)

Vijay Kumar, Chief Technology Officer, eMudhra, India

Focus on presence-less, paperless and cashless economy

Digital wallets do not merely mean go­i­ng cashless. To­day, India expects a merchant-less and a pre­sence-less banking. A customer wants everything to happen at the touch of a mobile. However, the ground reality is very different. Customer on-boarding is a key challenge as is merchant enrollment. Au­thentication and verification-related challenges also exist for repeated usage, which highlights the security risks that wallets carry.

Here, Aadhaar can facilitate the presence-less (e-authentication, under which a user’s credentials can be verified using the Aadhaar card), paperless (e-sign service and the government’s digital locker) and cashless (through UPI) ecosystem in the country. UPI is more of a payment consolidation interface; it is not based on Aadh­aar as such, but supports Aadhaar.

Benefits of e-sign

The Information Technology Act provides legal backing to electronic signatures. Indian law mandates digital signatures through a USP-token or electronic signatures through Aadhaar. The space is highly regulated and there is a controller or a certifying authority that grants licences to companies like us.

A major benefit of e-signatures is that it can be integrated with any wallet or any mobile/web application. It is a programming language independent technology, and one can use Java, or Python to integrate electronic signatures.

Second, the user experience is guaranteed as e-signatures do not take very long and is authenticated with the end-user’s consent. The user has to give the OTP or the biometric to form a signature. OTP-based e-signs are taken as a medium assurance, while biometric-based ones offer high assurance. The Reserve Bank of India mandates biometric-based e-signs for payments because of the higher financial risk of transactions.

Industry adoption of e-signs in public and private banks has been growing. Open­ing of fixed deposit accounts and sala­ry accounts are use-cases of e-signs. We also have private banks giving out biometric devices to corporate organisations when op­en­­ing salary accounts for their employees.

NPCI has been very supportive of this system as well. In December 2016, it came out with a circular allowing e-National Auto­mated Clearing House man­­­dates, allowing e-signs as the consent of the user. There are other activities such as nominee updates or change requests that are also happening through e-signs.

Capital markets, fund management companies, government organisations, loan and lending platforms, and digital locker platforms are also large adopters of e-signatures.

“A major benefit of e-signatures is that it can be integrated with any wallet or any mobile/web application.”

Trends in digital banking

In future, digital banking will witness several new trends such as electronic cheques. We are working with the NPCI to bring in electronic cheques, which will not be a scanned cheque but an electronically sign­ed cheque. Sign and pay is another new concept wherein once a user accepts an invoice, the payment will be released from the bank directly. This concept has been adopted in some countries globally and would drive merchant-based payments, if adopted in India.

(eMudhra has been instrumental in setting up the e-sign technology as a part of the Digital India programme. It is a licensed certifying authority and has digitally shared about 8 million signatures in the past eight years of operations. It has more than 100 large customers including banks and governments. There are 25 large banks in India that are using eMudhra’s signatures and authentication services.)