Mobile wallets are partnering with e-commerce marketplaces to drive transaction volume and value

Mobile wallets are partnering with e-commerce marketplaces to drive transaction volume and value

Mobile wallets are partnering with e-commerce marketplaces to drive transaction volume and value

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The adoption of digital payments has accelerated all around the world over the last two years. During the pandemic outbreak, more and more consumers turned to prepaid payment instruments to complete their purchases to avoid the possibility of Covid-19 infection, as physical money involved exchanging hands. The growing adoption of mobile wallets has led to a change in consumer perception towards the digital payments ecosystem, especially in countries like India, where Unified Payments Interface (UPI) has revolutionized the payments ecosystem.

Along with the growing adoption of digital payments method, e-commerce activities also ballooned during the global pandemic outbreak. Notably, the surge in online shopping has been in parallel with the growth of the digital payment landscape globally. Consequently, the partnership between mobile wallet providers and e-commerce marketplaces seems like the perfect strategy to drive transaction volume and value, and these are the same trends that are emerging in the global markets. For instance,

  • In September 2022, Paytm, one of the leading mobile wallets in India, announced that the firm had entered into a strategic partnership with Flipkart, the e-commerce platform owned by Walmart. Notably, the two firms forged an alliance for The Big Billion Days festival shopping season in India. To lure more shoppers to its mobile wallet, Paytm announced cashback deals when completing payments and purchases using the prepaid payment instrument offered by Paytm. Notably, Paytm is the third-largest mobile wallet provider in India in terms of market share. PhonePe and Google Pay are leading the mobile wallet market in India.

The trend of collaboration between mobile wallet providers and e-commerce marketplaces, before the year-end shopping season, has also emerged in more developed countries such as the United States. For instance,

  • In October 2022, Venmo, the mobile wallet service owned by PayPal, announced that the firm had entered into a strategic collaboration with Amazon, the global leader in the e-commerce space,. Under the collaboration, Venmo users will be able to link their prepaid payment instrument with Amazon to complete seamless and frictionless checkout. Initially, the firm launched the service for a select few users in the United States, however, it is expected to be rolled out across the United States before the Black Friday sale event on November 25th. With 90 million Venmo users, the prepaid payment instrument provider is targeting increased transaction volume and value through the strategic partnership with Amazon.

Notably, both collaborations, Paytm with Flipkart and Venmo with Amazon, come before the year-end shopping sale season. Notably, the partnership of Venmo with Amazon is crucial for both players. The collaboration comes at a time when Amazon has projected a single-digit growth in sales for Q4 2022.

According to a report from PayPal and Venmo, Venmo users makes two times more purchases when compared to an average shopper in the United States. These shopping habits of Venmo users can lead to more sales and order volume for Amazon in the upcoming Black Friday sale event. Notably, the collaboration with Venmo is also part of Amazon’s strategy to offer more payment options to its shoppers in the country. From credit cards to prepaid payment instruments and buy now pay later, Amazon is looking to increase convenience for its shoppers, thereby targeting a reduced churn rate and higher conversion rate.

For Venmo, this partnership with Amazon is a way to increase its monetization and reach profitability in 2022. Going forward, PayNXT360 expects that the strategic collaboration with Amazon will play a pivotal role in driving the revenue for the prepaid payment instrument provider. Given the massive reach of Amazon in the United States e-commerce market, the partnership is expected to become a game changer for Venmo over the next three to four years. Beyond P2P payments, Venmo can build on its partnership with Amazon to further disrupt the payments and fintech sector in the United States.

From the short to medium-term perspective, PayNXT360 expects more such strategic collaborations between mobile wallet providers and e-commerce marketplaces around the world. The growing shift towards online shopping, coupled with the rising adoption of digital wallets around the world, creates a perfect ecosystem for such alliances to drive business growth over the next three to four years.

To know more and gain a deeper understanding of the prepaid card market in India, click here.

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