E-wallet business may not work, say retail experts

Three factors are set to significantly change India over the next five years — digitisation phenomenon and society going cashless, 4G and Aadhar, say retail experts.

BS Nagesh, founder, Trust for Retailers & Retail Association of India, (TRRAIN), made a reference to what Infosys co-founder Nandan Nilekani commented recently that India would see disruptions due to digital payments in the Indian banking system.

“He’d (Nilekani) also emphasised on the fact that power was gradually shifting in the hands of mobile and peer-to-peer,” said Nagesh.

Kishore Biyani, founder and group CEO, Future Group, said their top management recently had a meeting on payments solutions, wallet services, etc, as there was a lot of excitement about these initiatives in the market.

“Interestingly, we did our number crunching and found that there are only 3.5 crore tax payers in the country. While there is a huge ongoing debate on ‘ek number and do number ka paisa’ (white and black money), till date there are only has two crore credit card users and a little over 1.5 crore unique (UID) numbers,” said Biyani, adding, “I am not a great believer of Aadhaar because 30% of India is not accessible thus negating the effectiveness of Aadhaar.”

He said, “People are expecting wallet service to generate Rs 10-20 crore revenues. However, till the time black and white money gets debated in the country, I don’t think this wallet business will ever work. Wallet means digital, digital means ‘ek number ka paisa’ (white money),” said Biyani adding that there is no need really for a wallet service.

He, however, also announced plans to start own wallet service.

“In the next two years, we will have more than 40 wallet companies in the country. There has to be value addition in whatever idea you do. We are also launching our wallet now,” Biyani said.

While there is consensus that wallet facility will get used mainly in the services sector, Biyani said it’s not really going to change the entire society very fast. “It is not really a profitable business to be in,” he said, adding that options like bank account, debit cards, credit cards already exist in the system to facilitate cashless payments.

So when will change really accelerate? Raghav Bahl, founder and chairman, Quintillion Media Pvt Ltd, said, “It will, when there is serious job creation. I think our politicians will have to learn their lessons at their cost. We recently witnessed a huge mobilisation in Gujarat which was nothing to do with the caste but people majorly stressed on the need for having real jobs.

“While the current government understands the problem, it’s just not moving fast enough. A few more jolts will get them to move faster and that’s the only solution. The market will expand only when the organised economy expands. It all comes down to infrastructure, investments, manufacturing and jobs. It’s just that someone has to wake up at the policy making level.”