E-Wallet: A boon for small traders
E-wallet has emerged the most simple and convenient payment method that allows a customer to make payment for any service or product on the go. Today, one can leave his wallet at home and still manages to live through the day, all thanks to this revolutionary technology, which has empowered your mobile phone to fulfill your cash requirements.
E-wallet is an online prepaid account where you can keep your money and use it whenever and wherever you want. With the help of a mobile application and Internet connection, you can pay for any product or service through this online account.
E-wallet’s popularity is growing around the world as small and medium retailers are tying up with e-wallet companies to expand their business. The majority of retailing or food companies have also developed their own mobile applications to sell its product and receive money.
In the past few years, Asian countries have shown a huge potential for the growth of e-wallet services. Increasing mobile connectivity and affordable smartphones have impacted people’s financial behaviour and decisions. Various governments have taken measures to encourage people to use e-wallet. They have made policies in favour of digital transformation and cashless economy.
The most important among them is the demonetization of two high-value currencies by the government in India to curb black money and encourage cashless transactions.
Though the decisions benefited all the e-wallet companies, the mobile payment and e-commerce platform Paytm registered the biggest gain with 400% to 500% increase in overall traffic on the very first day of the demonetisation announcement, ie, November 8, 2016.
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In China, the government offers land, lower taxes, subsidies on operational cost and funding to companies that work in innovative areas like digital solutions. The country boasts of the highest market of mobile payment services in the world. It’s growing further at an exponential rate.
Other governments like in Malaysia, Indonesia, and Thailand are also doing their bit to popularize e-wallet payment. Along with consumers and retailers, use of e-wallets benefits governments in several ways. It reduces pressure on the government to print physical currency and at the same time bring more taxes in the government coffer.
According to recent reports, the adoption of mobile payments will increase multiple times because of not only that people find it convenient; it’s equally useful to traders as well.
Traders say that it saves a lot of time, as they don’t need to go to the bank and stand in queues for deposits. Also, it makes money-handling a safe affair and ensures their personal safety as well. Since the money goes directly into the account, they don’t have to worry about anything. They can manage their account electronically and keep an account of every penny they earn.
India: E-wallet saved the day for small traders during demonetisation
When the Indian government had demonetized two high denomination currencies last year, e-wallet rescued millions of small and medium traders from financial misery.
While the big traders largely remain unaffected because all of them already had introduced PoS (Point of Sale) to accept payment through credit and debit card, it was difficult for small shopkeepers, for instances vegetable sellers or grocery shop owners or fruit sellers to afford this type of infrastructure at such a short notice.
So they started collaborating with e-wallet companies to beat the demonetization blues. With the huge shortage of cash, even people found it the most convenient and easy payment mechanism. They electronically transferred money from their account to their e-wallet and then through e-wallet, they paid to fulfil their day-to-day needs.
Government’s data suggest that on November 8, 2016, the day demonetization was announced, 1.7 million transactions were recorded through e-wallet companies such as Paytm, Oxigen, MobiKwik, Freecharge etc. and after one month on December 7, 2016, the number of transactions went up to 6.3 million. The increase regarding value was from 52o million on November 8 to 1191 million crore on December 7.
Promoters of wallet companies believe that demonetization will increase the share of digital payment for consumer consumption from present 5%-10% to 15-20% in a couple of years. The annual personal consumer consumption is estimated at $1.3 trillion out of which at the moment on $70 billion is being paid through digitally.
Wallets players PhonePe and Pockets have ‘Unified Payment Interface infrastructure’ feature which allows customers to use banking-based debit with wallet facility.
According to estimates, 46% FinTech companies are into payments and trade processing. India has over one billion mobile phones out of which only 30% are smartphones which come as a challenge for the digital payment.
China: Alipay or WeChat fulfil all your cash needs
E-wallet is the most developed online payment segment with two major players Alipay or Wechat. While Alibaba’s Alipay has captured about half the market, WeChat has 700 million active users in the world as it also offers messaging service.
Besides the two, Tencent’s Caifutong, Yinshang and 99Bill are other e-wallet companies which ensure that if you forget your wallet at home, you don’t need to worry. All you have to do is to carry your smartphone.
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Alipay collects payment from Chinese buyers for overseas online merchants, offers a Chinese customer overseas online shopping through the mobile phone and also provides custom declaration services.
So while visiting the popular food market or shopping centres or a coffee shop in Beijing, you can scan a QR code, enter the password and it takes just a few seconds to complete the transactions. One can avail the similar payment facility at movie tickets counters, taxi stand, magazine stores and even at tea shops.
E-wallet is so popular in China that a substantial number of people don’t carry credit or debit cards but make it sure that they carry their smartphone. An e-wallet keeps a record of all the transactions.
According to an estimate, the sale of retail products through e-wallet witnessed 85% jump in 2015 as compared to previous years. But rural China still relies on cash and experts see it as a great opportunity for e-wallet companies to grow.
Southeast Asia: E-wallet adoption will go up multiple times
According to recent reports, the adoption of mobile payments will witness multiple times increase because of not only that people find it convenient, it’s equally useful to traders as well.
Countries like Malaysia, Indonesia, Thailand, Philippines, Singapore, Laos all have been doing tremendous progress in propagating the use of e-wallet among customers and traders.
T-Cash, a mobile payment application in Indonesia, plans to bring 6 million new consumers to use its services by the end of 2017 and to achieve this target, the company is trying to collaborate with more than 30,000 new retail outlets.
Another e-wallet, Doku, has partnered with more than 100 merchants from different business verticals.
Similarly, Digital finance service is the largest FinTech segment in Malaysia. In 2014, the transaction value of digital payments was USD 3294 million only but in two years, in 2016 it has grown to USD 6251 million.
Maybankpay, launched by Maybank Malaysia, is country’s first mobile wallet, which allows people to transfer money from their account to their wallet and use it for day-to-day needs.
Small and medium traders have realised the benefits of e-wallet to increase their customer base and sale but the ease of handling cash and tendency to spend less and save more are some of the added benefits of e-payment which attracts more and more traders.
Various governments need to further make e-wallet lucrative with policies and schemes to attract hundreds of millions of huge untapped population which still bank on cash transactions.