The digital revolution has changed the way the world operates forever. The widespread adoption of devices such as smartphones, tablets and phablets has impacted the traditional business approach across industry segments within a very short span of time. This becomes extremely relevant for the players operating in the Indian market, considering the fact that despite already housing the third largest smartphone user base in the world, a major part of the country’s population has still not adopted digital devices in their everyday behaviour.
Needless to say, the payments industry, being the driving force behind all businesses, does not remain untouched in such a vast and viable eco-system that players operate in. The ripple effect of the smartphone revolution gave rise to an entirely new market segment that focused on providing convenient mobile payment solutions for the Indian consumers. Starting out as a method of handling small ticket transactions such as utility or bill payments, the industry today has become a multibillion dollar business proposition. Indian consumers are now using portable digital devices such as smartphones for most of their online shopping requirements, foregoing traditional platforms of transactions such as desktops. With such widespread adoption and exponential year-on-year growth being predicted, the industry is expected to cross $6.6 billion by the year 2020.
What, then, is next for the industry? Why, further evolution, of course. With the e-commerce and m-commerce business firmly in its pocket, the mobile wallet industry has made an unexpected move – social payments. Social or P2P payments have always been the staple in the offline world, and are common across all socio-economic groups; you go into a restaurant with friends, order food and split the bill amongst yourselves. If in urgent need of cash, you ask friends or family members to help you out. Mobile wallets are now replicating these social behavioural patterns within a digital ecosystem.
The most prominent example of this would be the US-based social payments app, Venmo. Venmo integrates the utilitarian aspect of the digital transaction with the social, community-driven experience. The app turns transactions into a social media-esque feed, which would then be visible to contacts using the same app. People can then like and comment on the feed items. Venmo also enables push-button money sharing and making requests through the app interface. The app has seen a high consumer adoption in the US.
Social payment trends are picking up closer home too. Certain mobile wallet players are now offering similar services, incorporating a social gift sharing option within their apps that allows users to curate the gifts according to the recipients’ tastes. Moreover, through features such as bill splitter and due tracking, these virtual wallets help Indian consumers keep their finances in check by presenting an up-to-date, accurate history of their social transactions.
Another development that is currently in the making is smartphone-based native payments, where smartphone users would be able to do financial and social transactions through native phone applications such as contact book and messaging. This could potentially make social transactions as simple as sending or receiving messages.
Given the trends in its favour, the P2P payments segment is expected to grow at a massive rate and is expected to touch $13 billion by the end of the financial year 2015. Several social media platforms are also now tapping into the vast field of opportunity that social payments provide. It would suffice it to say, that the future of financial transactions lies in a holistic payments ecosystem that will enable a cash-free global economy!
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