Flexible in Approach, Firm on Results

Mobile Wallets Market in India

• A short perspective document on the mobile wallets sector and key players
• Assessed through a regularly tracked set of performance indicators
• Published half-yearly

CY 2016 (Annual) Edition

© 2017 RedSeer Consulting Confidential and Proprietary Information www.redseerconsulting.com query@redseerconsulting.com |

Study Background

Objective
Gathering insights on multiple aspects of the Digital Wallet market in India including :-
• Industry size and market future
• Market share and insights on key players

Research Approach

RedSeer’s Integrated Research ApproachTM , incorporating the following-

• Primary Interviews with 300+ shoppers
• Merchant Interviews
• Desk Research

Note: 1. Transaction and GTV related performance numbers are broad estimates based on best available data
2. Currency conversion rate of USD 1 = INR 65 throughout the deck
Disclaimer: The numbers and analysis quoted in the report have been developed through RedSeer research with industry
experts and customer survey. The report is a fact-based study and should not be interpreted as a recommendation document.

Source: RedSeer Approach | 2

Indian regulation is enabling the cashless push through regulatory support,
with demonetization the most recent impetus
Annual Transaction Volume in India (%) Cash Cheque / DD ECS1 Mobile Wallets

Increasing Institutional Support

0,1% 0,3% 0,8%

Financial inclusion through 12% 13% 15% 15% 18%

Jan Dhan Yojana and 21%
Aadhar 3% 3% 2% 2%
2%
2%
Regulatory easing with
introduction of Unified
Payment Interface and
release of consultation
paper on P2P lending

Funding support to startups 88% 87% 85% 83% 81%

through Start-up India 77%
funding, and tax relief for
digital transactions

Infrastructure and expertise

support to startups through
incubators/accelerators
sponsored by VCs,
Universities and industry
bodies such as Nasscom 2011 2012 2013 2014 2015 2016

Notes: ECS includes IMPS, NEFT, and RTGS (various standards of Indian payments)

Source: Reserve Bank of India, 2016 | 3

Demonetization had a greater positive impact on Merchant onboarding as
first-time users adopted Digital Wallets
Growth in Digital Wallet Adoption due to Demonetization Consumer Merchant

Q: When did you start using Digital Wallets? (%) (N = 715)

Digital Wallet Onboarding by Time Period

Demonetization

47%

36%
30% 28%
27%
22%

8%
0%
2015 and earlier H1 2016 Q4 2016 Q1 2017

Source: RedSeer Research, 2017 | 4

Digital Wallets have now entered the high-growth phase

Growth in Digital Wallet Transactions, 2015-16

Volume (Millions) Volume, Millions Value (Billions, US$)

Value, USD Billions

123%
75%

5,8
965

550
2,6

2015 2016 2015 2016

Notes: Others includes Banking Tech, Insurance Tech, Trading Tech.

Source: Reserve Bank of India, 2016; RedSeer Analysis | 5

Online commerce is compounding the accelerated adoption of Mobile
Wallets with a strong network effect
E-commerce as a driver of FinTech Flow of consumption Partnership to provide user data

E-commerce
Lending Tech Mobile Wallets

Suppliers Consumers

Working Capital Loans Mobile Wallets

Financial Services Companies

Source: RedSeer Analysis | 6

Consumers have identified alternative online and offline use cases for
Digital Wallets beyond just Recharges
>20% 10-20% <10%

Growth in Digital Wallet Use Cases Bullish Neutral Bearish

Q: To what purpose do you use your Digital Wallet? (N = 314)

Digital Wallet Category Split (%)

Category Share of GTV Key Takeaways Growth Outlook

• Historically, recharges has been the primary use case for Digital
Wallets contributing >70% of the GTV
Recharge
• Ratio is declining with an overall increase in use cases
• The fastest growing category in 2015-16, Utilities contributes to
Utilities 10-20% GTV for most Wallets

• Pan-India tie-ups with restaurant chains and online aggregators

Restaurant is driving growth for Restaurant category

• Integration with Uber was the one of the first examples of

Taxi diversification of use cases for Paytm, and still remains a major
driver
• Although wallet takeup remains low, Paytm and Freecharge are
E-tailing both reaping the benefit of a tight integration with the e-tailing
business
• Despite user incentives, still remains a slow growth category with
Travel
low frequency use cases and high average transaction value

• Nascent category, primarily driven by user incentives; expected

Movies to grow quickly as offline cinemas adopt Digital Wallets

Source: RedSeer Analysis | 7

2017 will be an exciting year with growing consumer comfort and
ecosystem support
xx Annual GTV, US$, Bn
High-Growth Future of Digital Wallets

$ 0.2 Bn $ 2.6 Bn $ 5.8 Bn

Adoption Growth Stable

332%

2013 2015 2016

 Players start at small scale in
select Indian metros
 Customer adoption remains low
with primary usage directed
towards recharges and utilities
 Breakout years for sector – receives $1.3
Bn in 2015
 Market gets crowded with players
expanding footprint and merchant
onboarding
 Government jumps the digital
bandwagon with regulation
targeted at decreasing cash
usage by incentivising electronic
transactions

Source: RedSeer Analysis | 8

Paytm dominates the landscape in a very fragmented Digital Wallet market

India Transaction Landscape (%) Pay TM Freecharge Mobikwik Others

Mobile Wallet GTV Share

US$ 5.8 Bn
• Paytm, the most well funded Digital Wallet backed by Alibaba, is the
clear market leader with highest brand recall and adoption
• Tight integration with its own e-commerce business and a latest
Payment Bank license, Paytm is expected to remain market leader

42%
• Freecharge, acquired by Snapdeal, transitioned its recharge business
into a Digital Wallet, with Recharge and Utility still strength areas
• Integration with Snapdeal and offline merchant tie-ups will drive next
year’s growth

11%
4% • Mobikwik, backed by Sequoia Capital, has raised $125+ Mn, and is on
track to be the dominant third player with pan-India tie-ups with offline
and online Restaurants

43% • The rest of the market is extremely fragmented with 10+ players, and
none with a market share >4%
• Jio Money (on the Reliance Jio network) and Airtel Money (on the Airtel
network and Payment Bank License) are expected to be the breakaway
players

Source: RedSeer Research, 2017 | 9

Paytm leads comfortably in all categories; Mobikwik does well in
Restaurants with pan-India tie-ups
India Transaction Landscape by Category Rank 1 Rank 2 Rank 3
Q: To what purpose do you use your Digital Wallet? (N = 314)

Player wise Category Performance

Recharge Utilities Restaurant Taxi E-tailing Travel Movies

Source: RedSeer Research, 2017 | 10

For RedSeer Offerings please write to us at v@redseerconsulting.com

| 11
Flexible in Approach, Firm on Results

RedSeer is the leader Bangalore HQ:

in the internet Indiqube Sigma,
advisory space Plot 3/B, 7th C Main,
3rd Block Koramangala,
Bangalore - 560034

90% Delhi Office:

Indian GMV as
INHWA Business Center
clientele
Sector 48, Sohana Road

Thank You !
Gurgaon -122018
>USD 5 Bn
Investments Mumbai Office:
Diligence Completed query@redseerconsulting.com 25/b 4th Floor
Usha Sadan

400+ Near Colaba PO, Colaba

Engagements in Mumbai - 400005
internet space
Dubai Office:
42Seer Technologies FZE
50+ G-D-Flex G089 C-Thub
Leading global funds Dubai Silicon Oasis,
as clientele Dubai, UAE

© 2017 RedSeer Consulting Confidential and Proprietary Information www.redseerconsulting.com Query@redseerconsulting.com |