The last few years have seen many internet companies moving into payments business and the latest to jump into the fray is online food delivery start-up Swiggy. The Bengaluru-headquartered company has launched its own wallet – Swiggy Money. According to a notification in its FAQ (frequently asked questions) column, the wallet will initially be used to credit amounts for the cancelled orders. Later, however, Swiggy Money will function as a usual digital wallet to store money and for transactions on the platform.
The Meituan-backed firm’s wallet is powered by ICICI Bank and is a fully Reserve Bank of India (RBI)-compliant Prepaid Payment Instrument. This essentially means that users have to complete a minimum KYC (know your customer) by entering government-issued identification information to use the service. Notably, Swiggy Money went live just a day after RBI introduced a semi-closed Prepaid Payment Instrument for small-ticket retail payments up to Rs 10,000. It is now looking at add UPI (unified payment interface), credit card, debit card and net banking options to load money.
With minimum KYC, a Swiggy Money user can transact up to Rs 10,000 while a full KYC allows the user to load up to Rs 1 lakh at any given time. The wallet, which is currently available on food orders, will soon be opened up for Swiggy Pop, Swiggy Stores and Swiggy Go.
The industry analysts say business isn’t the usual for banks anymore and digital platforms today seem to have more hold on a customer, thanks to the advantage of consumer database, power of analytics, low-cost model and faster processes. You may not have a bank account or a credit score but Ola, Paytm, Amazon, Flipkart and Jio have profiled you and financial services providers are using that information to sell insurance, mutual fund, personal loans and many more products. The distribution space that these online aggregators are trying to get into is only to use their own data of customers for high financial gains. A few years from now, banks may be left with deposits, clearing and only large-value loan.
“Whether it is Ola or Swiggy, they have created customers at a far greater pace than any bank, and they have a better understanding,” said a senior official with a state-run bank, “The reason they get into financial services is because they need revenue models. Barring deposits, clearing and wholesale lending, other services will move to fintechs.”
Digital lending to grow
A BCG report says India has 338 lending start-ups and digital lending contributes to 23% of its overall lending market. Digital lending would grow to 48% by 2023 and represent a $1-trillion opportunity in five years, it says.