Where do the Mighty Desi Wallets Go from Here?

Future potential of Indian wallets

Research from RedSeer expects the existing $6 billion dollars’ worth of Gross Transactional Value (GTV) to grow at over 50 percent CAGR (by volume), supported by favourable regulatory measures. It also presents a huge untapped opportunity for multiple players the study further suggests.

The success of a wallet is driven by strong network effort and that includes merchants and customers incentivizing the other's adoption. New players will need ready access to a customer base to succeed. Therefore it will be difficult for a new player to enter the market to ensure long term business sustainability.

In a large and diverse marketplace like India, wallets have created a differentiated positioning for themselves. For example Paytm is the general use wallet and Oxigen is predominantly the tier 2 player. Currently, the top 3 players capture around 50 percent of the overall market, with more than 10 players splitting the remaining between themselves.

Looking at the data it looks like there is enough space for at least 4 to 5 major players and a number of smaller players.

Impact of Amazon wallet

There might be space for a few more players but right at the top there are too many jostling for the prime position in wallets market of India. Compared with established players with a large user base like Paytm, the Amazon wallet will have limited impact on the overall market landscape in the short term. And it’s hard to imagine Amazon of the deep war chests playing second fiddle as an itsy bitsy wallet either.

From a business perspective, the intent of the Amazon wallet launch is twofold:

1. Provide existing Amazon Pay customers with a convenient payment experience

2. Maintain a level playing field for PPI wallets provided by competing etailers Flipkart (PhonePe), Snapdeal (Freecharge) and Paytm (Paytm)


"Amazon wallet will provide more of an incremental impact on Amazon in the near term and will not swing its market share or increase customer stickiness in a big way. However, in the long term, it will provide Amazon with a strategic advantage as loyal customers will move towards smoother transactions on the platform for added ease and convenience," said Anil Kumar, CEO of RedSeer Consulting.

Threats to the industry

Low stickiness - merchants and customers are easily swayed by incentives and maintain 2-4 wallet accounts at any point.

Substitution by cash and digital products - the government is actively promoting alternative digital payments such as UPI which could upend the entire use case of digital wallets.

Business sustainability - currently, wallets have to incentivize both customers and merchants through discounts and cash backs, which directly impacts the bottom line and long-term sustainability.

Customer preferences

Customers choose wallets based on best available offers and are largely satisfied with the service offered to them with an overall NPS of 27 percent.

Merchants on the other hand, are pickier about the wallet's features with a lower NPS of 3 percent, being most dissatisfied with the commission structure.