In November 2016, the Indian government announced the demonetisation of two of the highest value currencies in the country – INR 500 and INR 1000. While the move was made in a bid to curb ‘black money’, it has also led to consumers moving towards cashless modes of payment.
The latest Mintel research shows that cash remains the most preferred method of payment in India with 89% of Indian consumers using cash as a primary mode of payment. However the usage of cards and digital wallets has become more common in the country. According to Government data, the number of daily transactions through e-wallet services such as Oxigen, Paytm and MobiKwik shot up from 1.7 million on the day demonetisation was announced to 6.3 million just one month later. In terms of value, the change resulted in a 267% increase, from INR 520mn daily to INR 1910mn. Clearly, the Indian consumer has been pushed towards using digital modes of payment due to cash shortages during this time and this is likely to continue given the convenience of digital payments and the lower risk it presents in comparison to carrying around large amounts of cash.
According to the Mintel Trend Seamless Spending, digital payment technologies globally are changing based on how, when and where people can buy and brands can sell. While globally the trend has moved from cash to cards and now to mobile and contactless payment methods, India is seeing a jump from cash to mobile and digital wallets.
While in India mobile wallets are offering cashback on online payments of utility bills, they also offer a marketplace for discounted products and services along with offering cashbacks on purchase of these products. An example of this is KitKat, which is now offering Paytm cashback on purchases of a chocolate bar which has a unique code inside its wrapper.
Retail chains have also tied up with mobile wallets to offer cashback and discounts when customers pay for products using a specific mobile wallet. Additionally, they are partnering with specific mobile wallets to offer loyalty programs which act as a unique differentiator, reducing their customers likelihood to switch stores and in turn building their loyalty towards the mobile wallet.
This provides an ideal win-win for the retailer, mobile wallet provider and the consumer. With access to real time customer transaction data, brands can design deals and offers based on consumer spending patterns and their priorities. Digital wallets can then help brands track the values the customer prioritises and identify their preferred buying patterns. In doing so, they can then find a way to customise their rewards to ensure repeat purchase.
Rimpie joined Mintel in 2016 as Consumer Research Analyst for India, to analyse and write about Indian consumers and the Indian market. Having worked at Mascot Spincontrol for over 5 years as MarketingManager, she brings beauty and personal care market knowledge to Mintel. While at Mascot, she researched different categories in India to contribute to journals and magazines and also presented at conferences focused on Beauty and Personal Care. Rimpie holds a Bachelor’s degree in Biotechnology and Masters in Management, specialising in Marketing.
