Is mobile wallet and payment industry headed towards consolidation?

Mobile wallets have been one of the primary beneficiaries of the increasing digitalization of payments. The demonetization drive brought in an early Christmas for the wallet players last year, with the leading e-wallets declaring an unprecedented increase in the number of users and transaction volumes. Besides, there are over one billion mobile connections and six million new connections are added each month. Taking into account the massive opportunity, the e-wallet industry in India is set to acquire share of more than $ 6.6 billion by 2020.

Despite the surge in the user base and popularity, the increasing cases of consolidations in the e-wallets and payments space cannot be overlooked. Amazon acquired the online payment gateway, Emvantage. Flipkart took over the payments app, PhonePe, while Shopclues acquired Momoe, the mobile wallet for offline stores. Last year also witnessed one of the top acquisitions in the FinTech space, with PayU snipping up Citrus Pay for $130 million.

Consolidation: The Survival of the Richest?

The dynamics have changed since 2016. Drying of source of funds and lack of growth in transactions between merchants and existing customers of the Wallet companies has made the case for consolidation in the mobile wallet space. Consolidation often is also a reflection of investors getting into the driving seat, steering different enterprises to reach breakeven and be profitable. The two entities operating in the same ecosystem- one with perhaps the right customer connect and the other with an advanced technical infrastructure, are better off operating as a single entity.

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