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Porter'S Five Forces

Freecharge and PayUMoney are two of the main rivals of Paytm in the digital wallet industry in India. The barriers to entry into this industry are high due to the infrastructure and investment required to implement security and encryption measures to protect users' data. Buyers have high bargaining power as they expect wallet services to always be available and work seamlessly. The threat of substitutes like UPI, mobile banking, and credit cards is very high as they provide similar convenient payment options directly through users' bank accounts. However, the threat of new entrants is low because of the high regulatory barriers and costs to enter the digital wallet market in India.

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Paras Dhama
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144 views2 pages

Porter'S Five Forces

Freecharge and PayUMoney are two of the main rivals of Paytm in the digital wallet industry in India. The barriers to entry into this industry are high due to the infrastructure and investment required to implement security and encryption measures to protect users' data. Buyers have high bargaining power as they expect wallet services to always be available and work seamlessly. The threat of substitutes like UPI, mobile banking, and credit cards is very high as they provide similar convenient payment options directly through users' bank accounts. However, the threat of new entrants is low because of the high regulatory barriers and costs to enter the digital wallet market in India.

Uploaded by

Paras Dhama
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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PORTER’S FIVE FORCES

Rivals of Paytm:

The portable wallets came into existence for most of the Indian population after demonetization and the
demands sky rocketed. Digital wallets were used as an alternative for the currency notes and were being
used in India as an intermediary before the new currency notes arrived. Several companies took
advantage of the situation and came up with their own mobile wallets to cater to the needs of increased
demand.

Few competitors are:

1. Freecharge: Freecharge claims on providing easy and fast exchanges with a transaction time of
less than 10 seconds. It has branded itself with fast food companies which provides an edge over
other competitors.
2. PayUMoney: PayUMoney focusses on SMBs and this company has propelled a POS terminal for
retailers where there is no month to month deal.

Barriers to Entry: HIGH

The increase of smartphone ownership and the excessive use of digital wallets for transactions like
shopping, etc. has created a security risk. There is a risk of data fraud and to enable the security and
encryption measures requires infrastructure and initial investment. People also don’t trust a brand easily
with their data and creating a brand image and trust requires serious marketing efforts which ultimately
makes the barriers to entry quite high. Dangers include hacking, information rupture, digital vandalism
and charge card extortion go about as boundaries for the versatile wallet division.
Bargaining power of buyers: HIGH

Consumers today anticipate that their E-wallets will work without any interruptions and in every
condition. Consumers believe that the services should always be available to them at their fingertips. It
doesn’t look good if a shopper or a client complaints of something like unsuccessful exchanges, ugly
offers, and over the top charges. Instalments have turned out to be modest, quick and hazy. High beat,
low exchanging costs and a plenty of substitute arrangements from interchange suppliers are pulling in
shoppers to these more up to date players who are giving another advanced affair. In this manner the
bartering force of purchasers is very high.

Threat of substitutes: VERY HIGH

The major threat of substitutes are:

1. UPI: Due to the relaxation of rules from RBI, UPI came into existence which can be used for
seamless money transaction directly into the bank account of customers. It has an added
advantage over digital wallets as it is fast, error free new technology that directly transfers and
debits money from customer’s bank account.
2. Mobile Banking: Mobile banking came into existence to enable users to use all the banking
services through mobile applications. This has an edge over digital wallets as it enables customer
to use multiple banking services at the same time directly through the bank account.
3. Credit card: Payment for transactions done can also be done through POS (Point of Sale) at
stores, even payments at websites or online transactions can be done using these cards issued
by particular bank to its user by including security feature such as Verified by Visa or MasterCard
Secure Code.

Threat of New Entrants: LOW

Due to the high barriers to entry which are present because of regulations from RBI, threat of new
entrants is low as any company entering into the industry has to follow certain norms set by the RBI
resulting in huge initial investment and time taken to setup the company.

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