Unbanked population in emerging markets gain focus of mobile wallet providers

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Mobile financial services have gained importance in recent years across majority emerging markets. The rural population in these markets has remained devoid of banking services for quite some time. However, with advent of extensive internet connections and cost effective smartphones, usage of mobile wallets and payment systems have increased. The need for financial inclusion is driving the growth of this segment. Mobile payments segment in India is likely to grow at a CAGR of over 50% during 2016-2020. Unified Payment Interface, digital wallets and payment banks are expected to drive this development.

Increasingly, unbanked rural population is being targeted by start-ups to capture a share of this high volume, low margin lucrative opportunity. Bangaluru based mobile wallet Novopay is one example. The company is gradually shifting its focus towards rural unbanked population owing to this trend. This segment amounts to 900 million people in India, which translates into huge untapped opportunity. Currently, many are using Novopay as local banking channel for fund transfers. The wallet integrates Aadhar card based identification and biometric scanning for increased security measures. Money stored in the wallet is directly linked to the bank account and there is no lower limit on transaction amount. It has also partnered with RBL, Axis Bank, IDFC and Bank of India for increasing the reach of its services. In 2015, Novopay registered 5 million transactions across its 44,000 outlets with approx average transaction per user amounting to USD 45. Novopay has built up a complete core banking system which consists of asset management, liability and payments systems. It is further backed up by low cost model of using local shops as outlets. This along with technology architecture is driving the increased customer base and profit margins of Novopay. The brand aims at increasing its development streak by five times and plans to open up 3 million outlets by mid of 2017.

To know more and gain deeper understanding of mobile payment industry in India, click here.