Mobile payment services in India are targeting digital gift cards segment to drive revenues

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Mobile Wallets have popularized cashless transactions in India in last two years. With the rise in smartphone usage, mobile wallets such as Paytm, MobiKwik, FreeCharge and PayUMoney have become popular choice for fund transfers and bill payments. Mobile wallet market stood at USD 76 million in Q2- 2016 and is expected to reach USD 7.2 billion by 2020. Paytm holds the top position with 105 million user base followed by MobiKwik with more than 27 million and FreeCharge with 21.5 million registered users. While the usage of mobile wallets has expanded across the country, companies are diversifying their service line to increase mobile wallet utility beyond bill payment and fund transfers.

Digital gift card segment is one of the most popular service lines which have scope of expansion for mobile wallets. Digital gift card segment accounts of USD 55 million which is expected to reach USD 361 million by 2020. Due to ease of sending and convenience of usage of digital gift cards, they have become a popular gifting option. During FY2015-16, this segment contributed 6.5% to the revenue of total gift market. In 2016, offering cash through digital gift cards became a major trend during weddings and festivals. Qwikcilver is the major player in this segment with 90% market share. Funded by Helion Ventures, Accel Partners and Amazon, it has partnership with more than 100 brands in retail segment. It has experienced 300% growth over past 4 years and one it’s most popular product is Woohoo gift card. Woohoo mobile app has a user base of 4 million currently.

PayNXT360 believes that competition in the Indian gift card market is going to intensify over the forecast period. As a result, there will be increased pressure on profit margins. Mobile payment services players will leverage their existing retail user base to gain competitive advantage. Over the medium term, focus is going to be primarily on acquiring gift card customers in both retail and corporate segments.

To know more and gain deeper understanding of prepaid gift card industry in India, click here