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54>;?963<<
M-Pesa’s Failure in India: Why Couldn’t Vodafone Replicate its
Kenyan Success? An International Marketing Case Study
Jackson Lott and Mona Sinha (Faculty Adviser)
Kennesaw State University
ABSTRACT
Vodafone’s mobile wallet service, M-Pesa, was originally created in 2007 for Kenya and was
extremely successful in providing millions with access to mobile-based financial services.
Essentially, a mobile wallet service enables payments via digital money in the form of mobile
airtime. According to industry estimates, the global mobile money market is expected to reach
USD 112.3 billion in 2021, with a compounded annual growth rate of 39.6% since 2016. Vodafone
launched M-Pesa in India in 2013, but by mid-2019 it had announced its plans to merge its mobile
wallet business with an associate company or a third party. Clearly, Vodafone had failed in its
attempt to market M-Pesa in India even though India is a rapidly growing emerging market with a
gross domestic product (GDP) growth of 8.2% in 2018. Currently over 90% of transactions in
India are cash-based largely due to lack of access to bank accounts and low penetration and use of
credit/debit cards. This not only hampers business but also exacerbates issues like corruption. India
is seen as lucrative for mobile wallet providers due to its large population with growing disposable
income, rising mobile phone penetration, increasing number of mobile internet users, government
reforms, and government investment in telecom infrastructure. Indeed, the Indian mobile wallet
market is poised to grow by 150% to reach $7 billion by 2023. Vodafone had hoped to repeat its
Kenyan success by using M-Pesa to target Indians who either didn’t have bank accounts or rarely
used them. However, it lost its early entrant advantage, and a host of new start-ups took over the
market. The dominant player now is Paytm, the fastest growing mobile wallet in India with a 70%
market share. This case study examines Vodafone’s marketing strategy in the context of the
competitive, regulatory, and cultural challenges in India. The case questions initiate discussions
on a wide variety of issues aimed at uncovering why Vodafone’s M-Pesa failed in India and what
it could have done differently.
The case study caught the attention of Mr. Michael Joseph, Chairman of Kenya Airways, who was
the founder and former CEO of Safaricom, a Vodafone investee. After reading the case study, Mr.
Michael Joseph gave an interview to Dr. Mona Sinha, Associate Professor of Marketing at
Kennesaw State University. In the addendum at the end of the paper, Mr. Michael Joseph explains
why M-Pesa did not perform as well in the Indian market as the company had originally hoped.
Keywords: mobile payments, mobile wallet, mobile money, mobile phone, emerging market,
India, Kenya, Vodafone, M-Pesa, Paytm, marketing strategy, Digitization, e-commerce, e-tail
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Introduction
E-commerce is growing rapidly
across the world aided by the rise in
digitization of money. India is a high growth
emerging market with a population of 1.13
billion, a gross domestic product (GDP)
growth of 7% in 2018 (“GDP Growth Annual
% – India,” n.d.), and the fastest growing e-
commerce market in the world, expected to
be worth $200 billion by 2026 (“E-commerce
Industry in India,” 2019). However, a key
deterrent for the growth of e-commerce is
that India is still a cash-driven economy with
over 90% of transactions being cash based
(“What government plans to do with the old
Rs. 500, 1,000 notes - How to get rid of old
notes,” 2016). The rates of counterfeit
currency as well as ‘black money,’ i.e.,
income on which tax has illegally not been
paid, exacerbates the problem of over-
reliance on cash (D’Cunha, 2017). Many hide
their money in cash, jewelry, other liquid
forms of currency, or even real estate either
to avoid paying taxes or because they do not
have bank accounts. Indeed, 92.5% of
Indians do not have or use bank accounts
(Pradhan & Beniwal, 2018). ‘Black money’
is so widespread and difficult to track that it
is estimated to impact anywhere from 23-
75% of the country’s GDP (Banik & Padalka,
2016). Additionally, low adoption of
credit/debit card point of sale (POS) systems
makes use of credit/debit cards difficult in
daily life (Sashidhar, 2016).
The cash-based economy hampers
business in India but is an untapped
opportunity for mobile wallet providers
because India has 813.2 million mobile
phone users (Pahwa, 2016) and 500 million
mobile internet users (“The World Factbook
India,” 2019). However, not only do Indians
seem to have a cultural preference for cash,
there are also other factors that impede the
growth of the mobile wallet market in India,
such as infrastructural issues with mobile
networks, lack of merchant education, and
unfavorable government policies (Srivastava,
2016). By using mobile wallets, many in
India will gain the convenience of cashless
transactions, and for the first time in their life
they will get access to loans, micro-
financing, and e-commerce. Indeed, industry
estimates indicate that the mobile wallet
market is poised to grow by 150% to reach $7
billion by 2023 (“India Mobile Wallet
Market Size & Analysis, 2018-2023,” 2018).
This case study first explains what
mobile wallets are and how the use of mobile
phones for currency transactions can replace
the use of cash. Then the case examines
Vodafone’s mobile wallet solution, M-Pesa,
which despite spectacular success in Kenya
and an early entry into India, has not
managed to survive the onslaught of local
competitors, especially Paytm. Indeed, by
mid-2019, Vodafone began looking for an
associate company or third party to merge its
M-Pesa mobile wallet (“ET Bureau,” 2019).
By understanding the socio-economic,
technological, and cultural context of the
Indian market, readers can evaluate
Vodafone’s strategy and answer the case
questions regarding what changes Vodafone
can or should have done to make to its
marketing plan for M-Pesa succeed in India.
What are Mobile Payments?
Digital wallets are payment systems
that store users’ banking and/or credit card
information in encrypted form and enable
users to make purchases digitally without
using cash. Digital wallets can be operated
using desktops, laptops, or mobile phones
(Williams, 2019). Using mobile phones to
make digital payment transactions is safe and
easy and is becoming a popular alternative to
bank accounts. Digital wallets can be used on
both smartphones and basic no-frills phones.
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What sets apart mobile payments from other
digital wallets is that users create an account
linked to their mobile phone and can
purchase and store money on it in electronic
form. This ‘airtime’ or ‘mobile minutes’ or
‘talk time’ can be purchased from the mobile
providers either online or from a physical
store and doesn’t require users to link their
phones to a bank account or debit/credit card.
The airtime can be used for making calls,
sending texts, or using data just as in a regular
phone plan, but the unique additional feature
is that the minutes can also be transferred to
others or cashed out at an authorized agent.
This makes it possible for people to purchase
airtime at stores and pay or send money to
others by transferring airtime. Transferred
airtime enables a range of payments for
utility or other bills, ecommerce, sending
gifts, purchasing more mobile minutes, or
even making cash withdrawals (“Mobile
Money | FAQ,” n.d.). By using ‘airtime’ as a
form of payment, mobile payments bypass
the need for having a bank account or
credit/debit card, and this has been key to its
success in many emerging markets and
developing countries where large segments
of the population remain unbanked.
Vodafone and its Mobile Payment System,
M-Pesa
Vodafone is a global mobile-data
service provider based out of the United
Kingdom. They made their first phone call in
1985, and by 2017 provided coverage across
92% of Europe with revenues of EUR 32.1
billion (“Vodafone Group Plc SWOT
Analysis,” n.d.). Vodafone’s mission is to
connect everyone in hopes to better today and
build a better tomorrow. They fulfill this
mission by providing access to their
innovative and groundbreaking technology in
many countries with fixed mobile-internet
networks and their mobile-money transfer
service, M-Pesa.
In 2006, Safaricom, a Vodafone
subsidiary in Kenya, was the first to
recognize that their customers were
exchanging minutes as currency, so they
expanded on what customers were already
doing by creating M-Pesa (M stands for
Mobile and Pesa is the Swahili word for
cash), a mobile wallet that enables Vodafone
users to put money into their prepaid phone
account that they can spend on airtime which
can be transferred to friends, family, and
vendors through SMS messaging or a mobile
app (Sen, 2014). M-Pesa was initially
designed to help migrant workers send
money home easier, but its usage quickly
expanded to include purchasing airtime and
data, depositing money, receiving/sending
money locally or internationally,
withdrawing funds, paying bills, transferring
to and from their bank, and having access to
micro loans (Mas & Radcliffe, 2010). Scores
of families were able to have access to health
care because their insurance provider gave
them money through M-Pesa for travel to get
medical attention and cover medical costs.
The key benefit of M-Pesa was that it gave its
users access to financial services wherever
they had cell service, with or without a data
plan. Thus, it could be used not just on
smartphones but also on basic no-frills
mobile phones. Vodafone also rapidly
established a network of agents where users
could purchase or cash out their airtime
accounts. Thus, M-Pesa was a result of
customer’s innovation, making their
marketing strategy truly “customer-centric”
(“Why Kenya leads the world in mobile
money,” 2015).
M-Pesa was transformative in both
urban and rural Kenya. Vodafone’s initial
goal was for 350,000 users in the first year,
but they rapidly surpassed it, gaining 1.2
million customers. According to the World
Bank, in four years M-Pesa was being used
by 80% of Kenyans, and by the end of 2017
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Lott and Sinha: M-Pesa's Failure in India
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they recorded over 6 billion transactions (529
transactions per second) (“Financial
Inclusion Data: India,” 2014). In fact,
Vodafone became one of the largest mobile-
money providers in the world with 31 million
customers in ten countries relying on their M-
Pesa service (“M-Pesa: Mobile Phone-Based
Money Transfer – Global Presence,” 2019).
In 2018, Vodafone celebrated 10
years of M-Pesa, sharing many stories
internationally of how M-Pesa has helped
fulfill their mission by stimulating economies
and communities around the world (“M-Pesa
From Vodafone,” n.d.). M-Pesa’s
revolutionary success in Kenya was due to its
ubiquitous distribution network, strong
brand, reliability, agent training, and its
usefulness in combating fraud. Essentially,
M-Pesa took advantage of the high
penetration of mobile phones (85-90%) in
creating an easy and convenient alternative to
the banking system for people who did not
have bank accounts (Kuo, 2017). President
Barack Obama remarked at the Global
Entrepreneurship Summit, “Kenya is the
largest economy in East Africa. High-speed
broadband and mobile connectivity are on the
rise, unleashing the entrepreneurial spirit of
even more Kenyans. Every day around the
world, millions of people send and save
money with M-Pesa -- and it's a great idea
that started here in Kenya” (Shapshak, 2015,
para. 8).
Vodafone entered India in 2013,
hoping to replicate its Kenyan success
because India too had large numbers of
people with no access to bank accounts, a
high mobile phone penetration rate, and an
economy that was cash dominant. According
to Sengupta and Banerjee (2016), adoption of
mobile payments would lead to an increase in
saving rates that would ultimately enable
capital investment in sectors such as roads,
ports, and railways (Sen, 2014). However,
despite being an early entrant into India’s
digital payment market, so far Vodafone has
been unable to succeed and instead has had to
cede leadership to Paytm, a domestic Indian
digital wallet. Currently, Paytm has 200
million active users (Variyar, 2017), whereas
Vodafone has just 20 million users (Singh,
2019) and has had to announce its plans to
close its M-Pesa business in India (Kurup,
2019).
India’s Cash Culture
Over 90% of transactions in India are
in cash, which hampers business, especially
e-commerce (“What Government Plans To
Do With the Old Rs.500, 1,000 notes - How
to Get Rid of Old Notes,” 2016). The cash-
based economy is so ingrained in Indian
culture that there are just 712 million debit
cards in India with 130 million debit
transactions per year (i.e., about 18
transactions per 100 cards). The penetration
of credit cards is much lower at 26.38 million,
with 83.95 million transactions per year (i.e.,
about 318 transactions per 100 cards). India
has the lowest debit/credit card point-of-sale
system (POS) penetration in the world with
only 693 machines per million people, so
credit and debit cards are hardly accepted
across India, thereby increasing the reliance
on cash (Sashidhar, 2016).
Bank access is also a challenge in
India, with 92.5% of the population not
having access to bank accounts (Pradhan &
Beniwal, 2018). India has just 100,000 banks,
and only 5% are in rural areas of the country
where nearly 70% of the population resides
(Sen, 2014). This was particularly
problematic for people wanting to access
financial services or even to save or send
money to others. For example, migrant
workers would use a traditional, informal
courier service called ‘hawalas’ to send
money home. These networks are not backed
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by legal systems and charge fees, but they
offer a cheap method of sending money long
distances as compared to formal financial
institutions. Lack of access to banks also
makes savings problematic. Keeping savings
in other forms can run different kinds of risks.
For example, keeping cash or jewelry risks
loss due to inflation or theft. Investing in
livestock is also risky because they may
perish (Agarwal, Champatiray, & Oza,
2011).
India’s cash problem is also linked to
the lack of transparency in payments and
taxes. In 2013, only 1% of India’s 1.25 billion
people paid income tax. Although many do
not have income high enough to be taxable,
there are many who hide their earnings in the
form of cash, gold, jewelry, or real estate
(D’Cunha, 2017). Cash earnings on which
tax is due but has not been paid is called
‘black money.’ Little is known about the full
extent of black money in India, but estimates
range anywhere between 23-75% of the
country’s GDP (Banik & Padalka, 2016). The
use of black money not only hampers tax
collection in India but also explains part of
the reason why cash usage is so dominant in
that country.
Use of mobile payments or other such
financial services better equips users to
absorb negative income shocks arising from
poor health, crop failures, and job loss.
Households not using formal financial
services are likely to experience a 6-10%
percent reduction in consumption in response
to similar income-related shocks (Banik &
Padalka, 2016). However, despite the
convenience and safety of mobile payments
as compared to cash, Indians were slow to
adopt it. Even in cities, only 48% of stores
accept digital payments, and of the total
transactions in India, just 10% are digital as
of now (“Payments: India's Cash
Conundrum,” 2019).
Using Mobile Phones to Change the Cash
Culture
India has 1.128 billion mobile phone
connections, the second-largest mobile
market in the world, behind only China.
Telephone density is at 83% nationwide but
is not evenly spread across rural and urban
areas. Urban areas have a 153% total tele-
density with a 5% wired and 148% wireless
tele-density (because many mobile users
have two or more SIM cards; Pahwa, 2016).
Rural areas have a 51% mobile tele-density
with only 0.5% of people on a wireline. Only
33.5% (i.e., 435 million people) live in urban
areas, while 66.5% (i.e., 864 million people)
live outside of the cities. This translates to
roughly 1 billion mobile phone connections,
but expansion opportunities still exist
because 216 million Indians still live without
access to a mobile phone (“The World
Factbook India,” 2019). Given this huge
penetration and the ability of mobile payment
systems to be used even on no-frills phones,
telecom operators sensed a large opportunity
of converting their users from cash to mobile
payments.
The government of India also
launched a ‘Digital India’ initiative, hoping
to spur growth in the digital payment market
(“Vodafone Group Plc SWOT Analysis,”
n.d.). Paying by mobile devices is the most
dynamic trend in the payment arena, and this
was expected to ramp up with increased
innovation in mobile technologies.
According to industry estimates, the global
mobile wallet market is expected to reach
USD 112 billion in 2021 from USD 21 billion
in 2016. This expected increase represents a
compound annual growth rate (CAGR) of
over 39.6% during 2016-2021 periods,
proving to be a promising market in years to
come (“Vodafone Group Plc SWOT
Analysis,” n.d.). Within the next five years,
the Indian mobile wallet industry is expected
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Lott and Sinha: M-Pesa's Failure in India
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to grow by 150% (Peermohamed, 2017) to
about $7 billion by 2023 (“India Mobile
Wallet Market Size & Analysis, 2018-2023,”
2018).
A Trigger Event: Fighting Cash
On November 8, 2016, Prime
Minister Modi disrupted India’s financial
system with a bold, overnight attack on black
money by removing the 500-rupee and 1,000-
rupee banknote, equaling 86% of the
currency, from circulation. This move was
done to eliminate counterfeit currency, curb
terrorism, and force out stashed money.
Millions of Indians had to deposit their cash
and exchange it for new notes. The Reserve
Bank of India (RBI) said that 99% of the
money, or USD 220 billion, was returned.
This was viewed as a hardship for many
Indians because a majority operates entirely
in cash (“What Government Plans To Do
With the Old Rs. 500, 1,000 notes - How To
Get rid of Old notes,” 2016).
Subsequent analysis showed that not
only did demonetization negatively impact
India’s GDP for two years, but it also did not
dampen the use of cash because most of the
black money was likely held in the form of
gold or real estate, rather than in cash
(Singhal, 2018). However, demonetization
did spur an initial surge of digital transactions
in the immediate aftermath. Prior to the ban,
the cash to GDP ratio was at 9.7% but grew
to 11.3%, and non-cash payments grew
dramatically as well. The move has been
praised by some because in the 2016-2017
fiscal year, India saw 30 million people filing
income taxes, a 25% growth (Pahwa, 2016).
M-Pesa’s Marketing in India
The Indian government supported
digital transformation in the payment arena.
M-Pesa had already been instrumental in
creating such a transformation in Kenya, and
Vodafone was a well-established mobile
service provider in India with a large user
base. India seemed a natural market for a
product like M-Pesa, and thus Vodafone
entered the Indian market in 2013 (Sethi,
2017). However, despite 409.3 million
mobile users, Vodafone only has 5.5 million
users of M-Pesa across India, as compared to
the dominant local competitor, Paytm, that
has 120 million (Holst, 2019).
Vodafone set up 80,000 locations
across India that allowed users to take or
deposit cash into their account, like an ATM.
M-Pesa targeted the unbanked and
underbanked in India: roughly 850 million
people (Lunn, 2017). They also had a strong
rural presence, with 56% of their outlets
being in rural areas. By leveraging these,
Vodafone was able to widen access to formal
banking for the first time.
What makes M-Pesa and other mobile
wallets so unique to the traditional banking
system is the cost of operations. M-Pesa’s
transaction fees are so small (0.01%) that
banks cannot compete with them. Where M-
Pesa’s cost to transfer about USD 50 was
about USD 0.50, a bank’s cost would be
about USD 5. Banks needed a different
pricing structure and different view about
customers to compete with mobile wallets
that were able to cut costs of fees since they
came bundled with a mobile phone provider.
Unlike banks that need to have a return on
investment, for Vodafone, although it would
have been nice to make profits off M-Pesa, it
was not necessary for them to do so. Instead,
they viewed M-Pesa as an additional service
that secures stickiness and loyalty of the
customer to the phone provider (“M-Pesa and
the Secret of Mobile Payments,” 2015).
Vodafone used both mass media and
social media to aggressively promote their
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product. They targeted mainly the youth in
the hope that they would create awareness
among the older generations. One way they
did this was by using their Zoozoo campaign.
Zoozoos are egg-shaped, lovable, cartoon
mascots that aired on commercials and on
YouTube video ads. They also sponsored the
Indian Premier League (IPL), a national
cricket league, since its second season.
Cricket is a very popular sport in India, across
all income and age groups, and given the
service’s mass market potential, this
sponsorship choice appears to be a good fit.
In 2019, the IPL had a viewership of 345
million views in the first two weeks of the
season (Tewari, 2019), with 50% of the
audience being under 30 years old (“Cricket
Most Watched Game in India, Draws 93% of
All Sports Viewers: BARC Report,” 2019).
Paytm
M-Pesa’s largest competitor in India
is ‘Pay through Mobile,’ or simply Paytm,
which was launched in 2010. Paytm is a
One97 product that has partnered with the
Chinese e-commerce titan, Alibaba Group.
With over 230 million mobile wallet users in
India, they have a higher penetration rate than
even Visa (“WhatsApp Pay India Debut
Targets Paytm Users,” 2019). In fact, Paytm
is the most used mobile wallet in India with
roughly a 70% market share (“Paytm Surges
in BFSI Payments with 70% Market Share,”
2019). Through this support, Paytm offers a
unique benefit for the Indian consumer by
providing access to Alibaba’s e-marketplace,
a one-stop-shop for bills, travel, products,
services, and entertainment. Originally,
Paytm started off as a prepaid mobile and
recharge platform but expanded rapidly to
provide a mobile wallet that uses a scannable
QR code to allow their users to pay for a
product or service in brick and mortar as well
as e-tailing (Bhattacharjee, 2017).
One advantage that M-Pesa has over
Paytm is that they allow cash withdrawals
and deposits without the need for a bank
account. With Paytm, to get the funding
feature added to the user’s phone, they must
add credits (i.e., money) with a debit or credit
card or by linking their Paytm account to a
bank account. Paytm charges users a 4% fee
to accept payments directly into their bank
accounts. Paytm has 12 million partner
merchants that accept payments using a
scannable QR code (“Paytm dominates UPI
merchant payment segment with 60% share,”
2019). In India, Uber has integrated Paytm’s
digital wallet into its own payment system,
thereby offering Uber riders an additional
payment alternative (Gooptu & Aulakh,
2014). Recently, the Indian government is
pushing for companies to store Indian users’
data in India itself. Recognizing that this may
become law soon, Paytm has partnered with
its investor, Alibaba, to process and store all
Indian consumers’ data on servers located in
India (Singh, 2018).
Paytm’s creative advertising on
television, out-of-home, newspapers, and
transit media focused on the large variety of
products it offers -- for example, mobile
recharge, wallet, payments, and online
shopping. It also associated its brand with the
Indian Premier League and other major
cricketing events through sponsorship to
ensure high visibility. Just in 2015, its
marketing budget was about USD 71 million
(“Paytm,” 2015).
Conclusion
Vodafone is one of the world’s first
mobile payments service providers, with 31
million customers in ten countries, and it is
due to its mobile wallet, M-Pesa, that
millions of people have gained access to
financial services for the first time. India has
the second-largest mobile market in the
7
Lott and Sinha: M-Pesa's Failure in India
Published by DigitalCommons@Kennesaw State University, 2019
world but has limited access to banking, low
debit/credit card penetration, and high usage
of cash. India faces problems with black
money that affects political transparency,
taxes, and income inequality, and to curb this,
the Indian government is supporting the use
of digital money.
M-Pesa was hugely successful in
Kenya and was an early entrant in India. They
targeted the underbanked or unbanked
especially in rural areas, home to 850 million
people, to provide them with access to
financial services. However, they were not
successful. Despite having 409.3 million
customers for its mobile phone service
(Manchanda & PTI, 2019), only 5.5 million
of its subscribers signed up to use M-Pesa.
Meanwhile, Paytm has close to 100 million
users by targeting the traditionally banked
and forming partnerships with companies
like Alibaba and Uber.
This case study outlines the
challenges and opportunities for mobile
payments in India and examines Vodafone’s
marketing strategy for M-Pesa in relation to
that of its largest competitor, Paytm. The
objective of this case study is to help readers
think about how Vodafone should change its
marketing strategy for M-Pesa in order to
succeed in India.
Case Questions
1. Why is India an attractive market for
mobile wallets?
2. What challenges do mobile payment
providers face in India?
3. Develop a marketing strategy for M-
Pesa to succeed in India.
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Addendum by Mr. Michael Joseph:
‘M-Pesa’s Failure in India: Why couldn’t
Vodafone replicate its Kenyan Success?’ is
an international marketing case study
published in December 2019 in the
Kennesaw Journal of Undergraduate
Research by now KSU alumnus Jackson Lott
and his international marketing professor Dr.
Mona Sinha.
The case study caught the attention of Mr.
Michael Joseph, Chairman of Kenya
11
Lott and Sinha: M-Pesa's Failure in India
Published by DigitalCommons@Kennesaw State University, 2019
Airways, who was the founder and former
CEO of Safaricom, a Vodafone investee. He
also is a pioneer in launching M-Pesa, a
transformative and hugely successful digital
payment service. Mr. Joseph reached out to
the authors to provide additional insights
about why M-Pesa did not succeed in India.
Below we summarize the conversation and
hope that it adds to the readers’
understanding of M-Pesa’s struggle in India.
Interviewees:
1. Mr. Michael Joseph, Chairman of
Kenya Airways; Founder and former
CEO of Safaricom, ex-Director of
Mobile Money, Vodafone Group
2. Devyani Parameshwar, Head of
Commercial, M-Pesa at Vodafone
Group
Interviewer: Dr. Mona Sinha, Associate
Professor of Marketing, Kennesaw State
University
Interview Date: February 27, 2020
“India seemed a great market for a service
such as M-Pesa given that there were millions
of migrant workers without bank accounts
who sent money home once or twice a month
often using unreliable and risky means.
Those who did have bank accounts would be
charged a 1.5% commission. Also, their
families would have to travel to the nearest
town with a bank branch, stand in line, and at
be at the mercy of unreliable electricity
supply and availability of cash at the bank or
ATMs in order to withdraw the money.
In Kenya, Safaricom had invested
considerable effort and money over the years
to build a critical mass of M-Pesa agents.
These were essentially small shop owners
across the country, including in villages, who
could also serve as M-Pesa agents, available
to sell mobile airtime as well as enable M-
Pesa wallet top-ups and withdrawals, as
needed. However, when Vodafone went to
villages in India where most migrant workers
came from, they did not find much economic
activity. Unable to find small shop keepers
who could serve as agents, they could not
create as good a network of last-mile agents
crucial to the service. Moreover, unlike
Kenya, poor, unbanked, or underbanked
consumers struggled to adopt self-service
technologies and needed assistance. Creating
awareness and driving behavior change
amongst this segment of the population
required tremendous resources in terms of
time, money, and human capital that
Vodafone would have to divert from its core
business in India, i.e., cell phone service.
Meanwhile, a slew of mobile payment
upstarts entered the Indian market. Unlike
Vodafone that aimed to service the unbanked
and underbanked, these new entrants, like
Paytm, reached out to middle class and
affluent consumers who wanted the
convenience and lived in urban and semi-
urban areas where agents could be easily
appointed. Given the income profile of their
target consumers, their technologies could be
based on linking their app to the customers’
bank accounts. This demographic was
markedly different from the
unbanked/underbanked consumers that M-
Pesa serviced who used feature/basic phones
and dealt in cash to top-up or withdraw cash
from their M-Pesa wallets. Moreover, Paytm
had the backing of large investors like Soft
Bank and Alibaba.
One key trigger event for spurring adoption
of digital payments in India was the
demonetization announcement by the Prime
Minister of India. However, a shortage of
cash at that time due to high-value currencies
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DOI: 10.62915/2474-4921.1160
being declared defunct meant that a cash-
dependent system like M-Pesa did not benefit
from the surge of mobile payment adopters.”
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Published by DigitalCommons@Kennesaw State University, 2019
