UPI vis a vis M-wallets: Billions at stake

UPI is great news. Anything that is good for the consumer is good for the industry and the economy. But there is a sub-story to this UPI story – the probable death of M-wallets as we know it or at least a considerable shrinking in opportunity and projected market share.

What’s at stake is more than 1 billion USD that’s already invested and billions more that could be in the pipeline. Here is an overview of the current funding scenario from the Payment Landscape in India report.


We all know the undeniable reasons why UPI sounds like wallet killer. Here is recounting the obvious ones for your convenience.

  1. Mobile phone is the primary device for payments, same as in case  of wallets. So, who owns the device now?
  2. The ‘collect’ cash feature can make a big hole in the wallets’ value proposition as Indians prefer cash, who does not know that!
  3. UPI permits usage of Aadhaar number, mobile number, and account number in a unified way, while not giving it away during the payment process. You could just create a ‘virtual payment addresses’ that are aliases to your bank accounts. The purview is more than any wallet permits.
  4. Rural demographic. All the wallets are headed that way. With Aadhar integration,  UPI has a ready market of 250 million Aadhaar payment bank accounts, making 1.2 billion transactions a year. This may pose the biggest threat to m-wallets.
  5. Wallets still have come to match UPI feature by feature. ‘Pay by’ date, multiple recurring payments, Payment System Players etc are few of the advantages that UPI will start offering from Day 1.

But what is the story from wallet’s side? There must be a counter strategy. Have the wallet providers formulated a strategy or are they still grappling with the idea? Anyone in the know? Or, any recommendations to the wallet providers on what their strategy can be?

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