Bank wallets growing faster than e-wallets

CHENNAI: In the bank versus e-wallets sweepstakes, the banks have now gained lost ground. As of February, the number of transactions put across through e-wallets have dropped 10% month on month in February while banks have gained 20% in the same period, over a larger base.
Reserve Bank of India data also shows that the 8 e-wallets, including Paytm, Mobikwik, Freecharge, saw a loss in their marketshare post November 8.
E-wallets, which had a market share of 34% of total PPI transactions (169.32 million) in December, saw a dip to 33% in January and then a sharp fall to 29% in February.
RBI data also showed that e-wallets saw maximum growth of 50% to 88 million transactions in the month of December, and then fell 1% in January, before falling another 10% in February to 78 million.
Bank wallets, pre-paid cards and vouchers however saw a growth of 57% in December to 173 million and post-demonetisation saw growth of 20% to 208.45 million in January.
So why are banks gaining an edge? "Banks have a captive customer base - they offer multiple products and payments is one among a vast number of offerings. E-wallets are transactional where float and transaction fee are their only revenue model, so there could be some structural changes in that ecosystem going forward. The players cannot continue to offer discounts, freebies and burn VC money for long without path to profitability. At some point they will feel the pressure from investors. Free lunches won't last forever," says Deepak Sharma, Chief Digital Officer, Kotak Mahindra Bank.
When RBI increased the cap on e-wallets from Rs 10,000 to Rs 20,000 in November, the expectation was that value of transactions for e-wallets would increase. It also saw e-wallets offering discounts to bring new customers under its fold.
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