Ecommerce firms' new game plans spoil party for payment wallet companies like Oxigen and Paytm

By Neha Tyagi & Saloni Shukla


MUMBAI: Some payment wallet firms say they are getting locked out of the booming ecommerce sector as the companies that run marketplaces prefer their own subsidiaries or are intent on making sure that customers spend any cash-back money on their own sites.

Oxigen said it’s no longer available on one of India’s biggest shopping sites. "We were present on Snapdeal before it acquired Freecharge and decided to take us down," said Ankur Saxena, CEO, Oxigen. "At one point in time they did accept wallets but now all of them want to come up with their own wallets." Freecharge is the only wallet option on Snapdeal, which has also launched cashback offers that direct customers to the unit’s offerings. Snapdeal acquired Freecharge for nearly Rs 2,400 crore in April this year.

Snapdeal did not respond to queries. Flipkart said it wouldn’t comment on its wallet practices.

Saxena said the trend would hurt Oxigen.

"There will definitely be an impact on the business because if the customer is not allowed to use my wallet on a particular site he will be forced to use another mechanism to pay," he said.

Imposing boundaries this early on in the ecommerce evolution could be seen as a restrictive practice said Ashvin Parekh, managing partner, Ashvin Parekh Advisory Services. "We have still not achieved anything in terms of penetration of e-commerce."

Market leader Paytm, however, isn’t too worried.

"We have better acceptability and more consumers,’’ said Nitin Misra, vice president, products, Paytm. "Why would a customer put money in a wallet that can be used only on that particular site and the cash back too cannot be used elsewhere? In my opinion, the consumer is not dumb. If somebody does not wish to allow us as a payment option on their site it is entirely their call."

To be sure, Paytm has diversified to start its own ecommerce platform. The government and the Reserve Bank of India have made financial inclusion a priority, making for an ecosystem in which payment wallets could play a role, along with a number of other elements. But critical for such companies is having a large subscriber base.

"Some players will always think that they are large enough, they have enough customers,’’ said Naveen Surya, chairman, Payments Council of India and managing director, ItzCash.

"But as you go deeper and start running the payment business independently, the moment you separate it out from the core business, you will realise that you cannot create scale."