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Top1. Introduction
India has always been a booming market for mobile space, as it enjoys one of the highest mobile penetration rates in the world (NewZoo, 2017). Equally, the Indian economy also has a high level of banking penetration. Although the banking services have remained traditional, the advent of mobile services has made a significant mark on the changing mindset of Indian banking customers (Shah, Roongta, Jain, & Kaushik, 2016). Within the gamut of mobile banking financial services, M-wallet payment solutions are thriving worldwide, including in India, as customers are switching over to smartphones and high-speed mobile internet (Karjaluoto, Shaikh, Saarijärvi, & Saraniemi, 2018). In February 2018 alone, mobile wallet app (henceforth M-wallet app) customers completed 310 million transactions, which is a threefold increase over the 99 million transactions in October 2016 (Reserve Bank of India, 2018).
M-wallet usage has in part accelerated due to the Indian Government’s demonetization policy in 2016. This resulted in a cash crunch and the subsequent necessity for alternative payment solutions such as M-wallets among bank customers. The Indian Government’s policy to promote ‘Digital India’ has given a great impetus to customers to use alternate payment methods such as the M-wallet (Financial Express, 2018). A closer look at the Indian M-wallet app market reveals that one player (Paytm) is holding 42% of the market share, whereas the rest of the market is deeply fragmented in nature (RedSeerResearch, 2017). The M-wallet market in India is poised to grow to USD 4.4 billion by 2022 (Capgemini & RBS, 2015) and to USD 1 trillion by 2033 (Credit Suisse, 2018). These statistics and projections show record growth in the M-wallet industry. However, considering India’s population and the vast proportion of mobile users (300 million smartphone users) (Live Mint, 2017; NewZoo, 2017; Nokia, 2018), the growth cannot be considered particularly significant or phenomenal. This may be due to various existing factors related to hesitation in consumer acceptance of M-wallet apps in the Indian context.
The evolution of electronic payment systems in an economy provides considerable social benefits (Humphrey, Kim, & Vale, 2001). However, a significant proportion of merchants and customers in India still prefer cash, because of its high convenience and perceived low risk (Bijapurkar, Shukla, & Mridusmita, 2014; Dahlberg, Guo, & Ondrus, 2015; Stavins, 2017). Although there are approximately 29.1 million credit cards and 890 million debit cards in the country, studies suggest that most of these cards (77% by value) are used for cash withdrawals from Automated Teller Machines (ATM) (Reserve Bank of India, 2017). Additionally, those who use M-wallets generally use them for lower value payments (Reserve Bank of India, 2018).