HDFC Bank’s Aditya Puri says wallet business has no future


NEW DELHI: Aditya Puri, the Managing Director of HDFC BankBSE 3.75 %, has said he sees no future in digital wallets. Speaking at the Nasscom India Leadership Forum today, Puri was skeptical about this new trend in digital payments, which gained huge traction after demonetisation.

After demonetisation, people have grabbed whatever is easily available to pay for coffee, bills, movie tickets, cab rides and just about anything, he said. However, as alternatives to cash payments evolve, users comfortable with mobile wallets today could shift to an easier digital platform, he added.

Puri also mentioned Paytm, which he said could not be another Alibaba because its model could not be replicated due to Indian regulations. He said the current loss of Paytm was over Rs 1,600 crore.

“There is no money in the payment wallets business. Payment wallets have no future. There is not enough margin in the business for wallets to have a future,” Puri said.

Experts say that in the long term, systems like UPI stand a better chance as they enable direct transfer from bank accounts.

Mobile wallets have gained popularity after demonetisation but as new digital payment options emerge, they may fade away as they have several limitations.

For one, they are not interoperable. Transferring money requires sender and receiver to have the same company’s account.

Besides, the money transferred to a wallet does not earn interest. Small merchants can’t draw more than Rs 25,000 a month from a digital wallet, which affects cash flow.

Meanwhile, talking about new banks’ future, Aditya Puri said: “As far as the new banks are concerned, they (new banks) have to spend like others to get customers. It’s like making chicken curry without the chicken. Get the chicken and I will tell you how much competition there will be.”