Chapter 1

Introduction

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 E-wallet is a type of electronic card which is used for transactions made online through a computer or a
smartphone. Its utility is same as a credit or debit card. An E-wallet needs to be linked with the
individual's bank account to make payments. E-wallet is a type of pre-paid account in which a user can
store his/her money for any future online transaction. An E-wallet is protected with a password. With
the help of an E-wallet, one can make payments for groceries, online purchases, and flight tickets,
among others.

E-wallet has mainly two components, software and information. The software component stores
personal information and provides security and encryption of the data. The information component is a
database of details provided by the user which includes their name, shipping address, payment method,
amount to be paid, credit or debit card details, etc. For setting up an E-wallet account, the user needs to
install the software on his/her device, and enter the relevant information required. After shopping
online, the E-wallet automatically fills in the user's information on the payment form. To activate the E-
wallet, the user needs to enter his password. Once the online payment is made, the consumer is not
required to fill the order form on any other website as the information gets stored in the database and is
updated automatically.

In today's world , smartphone has become essential part of daily life .India will exceed 200 million
smartphone users, topping the US as the world's second largest smartphone market by the end of 2016
due to increasing penetration of affordable smart mobile device in the country. Shoppers are adopting
digital wallets at an incredibly rapid pace, largly due to convince and ease of use .

A digital wallet has both a software and information component. The software provides security and
encryption for the personal information and for the actual transaction. Mobile wallets use NFc
technology to make contactless payment. NFX is a form of short range wireless communication between
two electronic devices. Retailers must have a NFC POS system in place in ordee for consumers to use
mobile wallets.Typically, digital wallets are stored on the client side and are easily self-maintained and
fully compatible with most e-commerce Web sites. A server-side digital wallet, also known as a thin
wallet, is one that an organization creates for and about you and maintains on its servers. Server-side
digital wallets are gaining popularity among major retailers due to the security, efficiency, and added
utility it provides to the end-user, which increases their satisfaction of their overall purchase. Digital
wallets are composed of both digital wallet devices and digital wallet systems. There are dedicated
digital wallet devices such as the biometric wallet by Dunhill, where it's a physical device holding
someone's cash and cards along with a Bluetooth mobile connection. Digital wallet is being used more
and more in Asian countries as well. One in five consumers in Asia are now using digital wallet
representing twofold increase from two years ago.

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In line with government reforms, Prime Minister Narendra Modi has pushed Indians to adopt cashless
transactions, giving the digital payments sector a significant boost.

The sector is experiencing an unprecedented jump in growth since November last year, when the
government demonetized high currency bills (Rs 500 and 1000) – which represented 86 percent of
India’s cash in circulation. By February last year digital wallet companies had shown a growth of 271
percent for a total value of US$2.8 billion (Rs 191 crore). On September 18 -2017, the world's largest
internet company, Google, launched digital payments app Tez in India. Tez is yet another payments
platform that joins a long list of cashless payment platforms — from BHIM to AadhaarPay — offered
since demonetisation 11 months ago. The launch came at a time when digital transactions are showing
mixed trends — up some weeks and flat on others. Overall, though, cashless payments are much higher
than in the pre-demonetisation months.

The Reserve Bank of India is doing its best to encourage alternative methods of payments which will
bring security and efficiency to the payments system and make the whole process easier for banks.The
Indian banking sector has been growing successfully, innovating and trying to adopt and implement
electronic payments to enhance the banking system. Though the Indian payment systems have always
been dominated by paper-based transactions, e-payments are not far behind. Ever since the
introduction of e-payments in India, the banking sector has witnessed growth like never before.

According to a survey by celent, the ratio of e-payments to paper based transactions has considerably
increased between 2004 and 2008. This has happened as a result of advances in technology and
increasing consumer awareness of the ease and efficiency of internet and mobile transactions.

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In the case of India, the RBI has played a pivotal role in facilitating e-payments by making it compulsory
for banks to route high value transactions through Real Time Gross Settlement (RTGS) and also by
introducing NEFT (National Electronic Funds Transfer) and NECS (National Electronic Clearing Services)
which has encouraged individuals and businesses to switch ia is clearly one of the fastest growing
countries for payment cards in the Asia-Pacific region. Behavioral patterns of Indian customers are also
likely to be influenced by their internet accessibility and usage, which currently is about 32 million PC
users, 68% of whom have access to the net. However these statistical indications are far from the reality
where customers still prefer to pay "in line" rather than online, with 63% payments still being made in
cash. E-payments have to be continuously promoted showing consumers the various routes through
which they can make these payments like ATM’s, the internet, mobile phones and drop boxes.Due to
the efforts of the RBI and the (BPSS) now over 75% of all transaction volume are in the electronic mode,
including both large-value and retail payments. Out of this 75%, 98% come from the RTGS (large-value
payments) whereas a meager 2% come from retail payments. This means consumers have not yet
accepted this as a regular means of paying their bills and still prefer conventional methods. Retail
payments if made via electronic modes are done by ECS (debit and credit), EFT and card payments.

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Objectives of the study:

 To study the evolution of Digital Transaction in India and to understand financing of such
sector focusing mainly on Digital Wallets.
 To do an in-depth study of the structure and financing of the largest Digital Wallet in
India i.e. Paytm with future prospects.
 To encourage discourse about Paytm in the Current Market and suggest steps for
improving its potential

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Research Methodology
Research means a search for knowledge or gain some new knowledge and methodology can
properly refer to the theoretical analysis of the methods appropriate to a field of study or to the
body of methods and principles particular to a branch of knowledge.

Methods of data collection Data collection

Primary data
This is those, which are collected afresh and for the first Time. There are many ways of data
collection of primary data like observation method, interview method, through schedules, pantry
Reports, distributors audit, consumer panel etc. The method used by me for the primary data
collection was through questionnaires.

Questionnaire method

For the collection of primary data, I used questionnaire method. A formal list of questions, which
are to be asked, is prepared in a questionnaire and questions are asked on those bases.

Secondary data :

These are those data, which are not collected afresh and are used earlier also and thus they
cannot be considered as original in character. There are many ways of data collection of
secondary data like publications of the state and central government, reports prepared by
researchers, reports of various associations connected with business, Industries, banks etc.

Secondary data were collected from the following sources:

A) related to the topic

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