Everyone Wants A Bite Of India's Hot Digital Wallet Market Last month, online marketplace Amazon India, which has already taken the homegrown e-commerce companies by storm, was granted licence to operate a pre-paid payment wallet.

As India braces to go cashless and evolve into a digital economy, national and international giants are making the most of this transition, lapping up every opportunity that comes their way.

Homegrown payment wallets and gateways have accelerated their efforts to capture market, especially post demonetization. Even, their international cousins are prompt enough to step on the road treaded by them, realizing fast the utility of exploring this promising, yet virgin space.

Global e-payment company PayPal is rumored to seek licence for entering this market. Last month, online marketplace Amazon India, which has already taken the homegrown e-commerce companies by storm, was granted formal permission to operate a pre-paid payment wallet.

Apart from these, Facebook-owned messaging app Whatsapp is also speculated to start a peer-to-peer payment system in India. All this goes to prove the growing potential of e-wallet in the country.

Is There Space For Everyone?

The success of an e-payment engine is decided by its strong networking efforts — merchants adopting new ideas and customers incentivizing them.

New players will need ready access to an existing customer base to succeed. So, it is difficult for any particular firm to enjoy long-term business sustainability. Again new entrants will also find it difficult to corner their market share in presence of their big brothers in the field.

A detailed report by RedSeer Management Consulting Ltd has revealed that currently top three players have captured 50 per cent of the overall market, with 10+ players splitting the remaining among themselves.

The report further explained that in a large and diverse marketplace like India, e-wallets have curved out specific zones for themselves. Paytm is a general-use online wallet while Oxigen is predominantly a tier-II player. Thus, there is enough space for at least four-five major players and a number of smaller ones.

"Amazon Wallet will provide more of an incremental impact for 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," Anil Kumar, CEO, RedSeer Consulting said.

Local Companies Must Stay On Guard

As international players have started to strategize around this idea, the Indian e-payments market is expected to get injected with a lot of fresh capital. This could make things competitive for Indian players, who need to have sufficient capital and maintain a stable user base to fend off new players.

As we speak about this, media reports suggest that Paytm is expected to raise INR 12,000 crore from Softbank, while MobiKwik is also speculated to merge with close rival FreeCharge, part of Snapdeal.

"A huge portion of our population still lacks access to formal banking and increased competition in this space will only auger well for the end user. Paytm, which until now has been the breakthrough performer in this space, is bound to see increased competition," said Nikhil Kamath, head of trading & co-founder, Zerodha, an online trading company.

In the coming months, the e-payment market is expected to only get fiercely competitive and it would be interesting to see how local companies survive the wrath of international entrants.