February 24, 2020 | DWAIPAYAN REGMI
Starting with Esewa, there emerged other digital wallets- Khalti, IME Pay, Cell Pay till now. Apart, there are several mobile banking applications of each bank, and NHCL has its own Connect IPS. Capturing the uncaptured market, IME Pay seems concerned in remote regions of Nepal, whereas Esewa and Khalti seem to be city and town focused. That was fine, but as of now, we can see the aggressive promotion of Cell Pay too.
Esewa and Khalti are focused much over the merchant payments. On the other hand, Connect IPS has come up with other important payments – including revenues and broker payments. It’s nice to see that digital payment has been drastically increased in the Nepalese case. However, the payment gateway has also been increasing. This article tries to analyze the major impacts that will be seen with rising over such payment gateways. The following are the major impacts that will be possibly noticed with the rise in such apps.
Confusion among customers
Too much of service providers offering the same service will all end up in confusion among users for sure. The users will be confused about which app is appropriate and which one would meet up their requirements. Although they will offer a similar range of services – customers remain confused about which one to use. In the meantime, a normal smartphone today would have around 16-32 GB of storage. Customers would be confused about which one to keep and which one to delete there.
Voices for inter-app transactions
With rise over such apps, there will be voices about inter-app applications. Fund loaded in Esewa should be transferred to Khalti or Cell Pay. Only then the digital transformation can be felt and realized. There are banking apps that are limited to some particular digital wallet. While some support Esewa, others have Khalti with them. They should be easy and reliable – as the user can’t use all digital wallets that keep hitting the market. The scattered funds, if the customer would want to restore – would be under confusion about the procedure. Hence, they must maintain the provision through which they can make a transaction on the inter-app basis.
Competition with Mobile Banking Apps
One question that these digital wallets should answer is – why should the customer use these digital wallets over mobile banking applications? There are more merchants with digital wallets, and they don’t charge any sort of fees like that of mobile banking services; but why should someone load funds if they are not to get any interest out of it? In upcoming days, when mobile banking gets upgraded – there will be a major challenge about the competition. Should customers work through their mobile banking application or is it that they should rather work from such an app? There certainly will lie big chaos in the upcoming days.
Promotional Offers around
Discount offers, reward schemes are other vital essentials that have to be taken into consideration. Customers have a habit of resistance to change, and hence they don’t want to change the practice that they are adapted to. If a customer has been using Khalti for long, they certainly won’t want to upgrade to something next. Hence, these online service providers must come up with various promotional offers for their increased service usages. There will appear various promotional offers ranging from rewards points to other attractive schemes to attract customers around.
Restrictions by Central Bank
It took a long time for Nepal Rastra Bank to realize that there are too many commercial banks in Nepal. This all ended up with the pressure over the merger, and barriers to new entrants. This could be seen in this digital wallet future as well. And minimum requirement could be possibly identified setting restrictions over paid-up capital among such digital wallets as well. Although there is a minimum amount that NRB holds from them – this holding amount can be raised too. Central Bank will have to come up with some strong policy defining their guidelines. They should work up with directives focusing on these issues and set limitations over them. After all, they have been working as digital banks in Nepalese contexts.
There might be concern over the voices explaining we have too much of such platforms like they have been doing to banks right now. Hence, it would rather be wise to determine what is the optimal requirement now and then make decisions accordingly. It’s good to have few competitors, but too much of them can end up in negative consequences. Customers will opt to pick simply one out of all. Hence, the challenges can be noticed in the upcoming days sooner. Like it’s unknown what iPay is up with; there are possibilities that large such platforms will be shut down as well.