Secret of – Why Google and Facebook are in Payments App Market?

When was the last time you used cash to buy an electronic product? Don’t really remember! Yes, it has been a subtle shift from our currency notes to the digital currency and we have adopted it without even realizing.

Digital payment wallets, apps and methods to transact digitally have become so much a part of our lives, that if you are smartphone user, the number of apps that you have in your smart phones for digital banking will easily outnumber any other single category of apps. Sending money, receiving money, paying utility bills, recharging mobile, DTH recharges and many such daily chores are performed by us with ease. You may not realize but the electronic modes of transacting have taken over our old methods of transactions in just last 3 years.

When it comes to payments apps and wallets the market already has sufficient players and its soon going to get crowded. To add on to the already existing payments app race, Whatsapp is soon coming with its own payment features that shall empower you to make payments using the existing Whatsapp messenger.

This small infographic shows when the major e-wallet players entered the market. 

Timeline of  Payments Apps entering the market    Source:  www.wikipedia.com

e-wallets, payment apps, apps provided by banks, payments wallets and apps by your mobile service providers all are vying for your smart phone space, and adding new features every day to hook you on. Let’s take a sneak peek at why are these giants chasing your smartphones.

Revenue Models: So are these e-wallets and apps charging you for your transactions? a big no. There revenue models revolve around, seemingly insignificant threads of income like small fees for facilitating bill payments from service providers, transaction fees or commissions from merchants and vendors, cross selling financial products and other products, and probably the biggest of  all data-monetization.

While playing at with payment services and other features, these platforms may evolve into ecosystems for micro-credits and alternate merchant payment models. If all these threads of miniscule income seem unsubstantial to you, let’s have a graphical look at the data of electronic transactions in India in last couple of years. Also the percentage of users and volume transacted through digital payments apps. 

Data Source: www.npci.com, www.rbi.org.in

 

This infographic tells you a self explanatory story of why these companies are racing into the digital payments market. These 740 million transactions and terabytes of consumer data gives the companies a peep into the spending patterns of people. These payments app may soon evolve into a complete payments network eco-system similar to a social media eco-system and provide the most important and missing part of the consumer profile puzzle. The insights of economic  behavior this data would provide shall open completely new avenues for these competing corporate giants.

Hence its evident that players like Flipkart (Phone Pe), Google ( Tez), Facebook (whatsapp payment features) and many more have hit the market with a bang. Competing with them are the four payments banks (India Post, Airtel, Paytm, Fino Payments bank)  those have recently started their operations.

So, we as consumers are going to have a gala time in digital banking. Be ready to be pampered and spoiled by your new age digital bankers.

Happy Digital Banking!