With more than two billion citizens, India offers a perfect test market for many Silicon Valley companies – including Uber – to try new features and analyze consumers’ habits.
While India’s Prime Minister Narendra Modi announced the demonetization of all 500 and 1,000 roupies bills, it became clear that digital payments have surged in the country, regardless of the age of consumers.
The future of mobile money is also rapidly changing, from QR codes to pay at the grocery store and at the market, to the rise of “superapps”.So, has India become a sneak preview of what is to come in the western countries?
Money bills will disappear
From Paypal to Venmo, from Transferwise to crypto-currencies… Digitalized consumers in the western world has been using sporadically apps and other cryptos to pay and invest on a regular basis.
But in India, money digitalization has taken a step forward last week. India’s Prime Minister announced it would stop printing several bills.
“The radical change came after demonetization — now people prefer to pay digitally,” said Anil Chowdhary, a stationery store owner interviewed by the Financial Times.
“In the beginning it was annoying, but it will benefit the next generation”, he added. As a matter of fact, fintech experts are already developing hundreds of fintech apps – thus generating a very competitive market.
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A very competitive market
Digital payments in India are set to increase by 20% in the next four years – which is the fastest growth in the world for a country, according to a study published by PwC research.
As the Financial Times reports, India would see its transaction value increasing from approximately $64.8 billion this year to $135.2 billion in 2023. At the moment, Walmart-owned Flipkart as well as PhonePe apps, Silicon-Valley made Google Pay and the local Indian-made start up Paytm are the most popular fintech applications.
— WU Business Solutions (@WUBusiness) July 4, 2019
Moreover, according to CB Insights, India is the first market in Asia – surpassing China. More than $286 million were spent by investors only for the first three month of this year.
That said, the country remains a very competitive market for newcomers. For example, the Indian Google Play store offers more than 12 different applications to pay. Analysts stress that while it is easy to get customers, it is an extremely hard task to keep them.
“Today the battle is about acquiring customers, whatever you can do to create customer stickiness”, asserted Arnav Gupta, an analyst at Forrester to the Financial Times.
Next stop: the one-stop app
While the Indian market seems fragmented in many apps, it also gives a clear idea of what consumers are seeking: a one-stop “shop” app where they can pay, buy, order, receive money and transfer funds to their account.
Reliance Industries, an Indian company valued at $120 billion is going to launch an app soon along these lines.
— ET NOW (@ETNOWlive) July 2, 2019
According to Mukesh Amban, Reliance’ CEO, the goal is to attract WhatsApp users – who are more than 300 millions in India.
As Mr Amban has the key to a local client base, he is said to be the most capable businessman to use his local knowledge into a powerful leverage.
According to the grocery store owner, Mr Chowdhary, more than 70% of the “Indian economy will be digitized in less than a decade”.