It's hard to find a more competitive mobile wallet market than India, with 1.3 billion consumers and multiple viable wallet apps, including Freecharge, Paytm, Citrus Payment, Oxigen, Mobikwik, Zaakpay and ItzCash. But this crowd is competing for a consumer base that favors cash for all transactions.

The mobile wallet in India is complicated by the strength of cash payments and the relative scarcity of credit cards, said Pramod Saxena, chairman of Oxigen Wallet. Many e-commerce shipments are COD (cash on delivery), but other than Oxigen, most digital wallets favor credit cards, he said.

"Cash on delivery is a serious problem" because sometimes the customer will change his mind and refuse the shipment, he said. "Or the customer is not there when the goods are delivered. This is a serious viability challenge … Today, more than 30 percent (of e-commerce shipments) are returned," he said.

Domestic vendors like Oxigen must also contend with interest from foreign powerhouses like China's Alibaba, which is a financial backer of the Paytm wallet. Saxena argues that Alibaba's marketplace must eventually compete against the same retailers it is now trying to woo with Payt.

"Why would they choose (a wallet) that will compete with them? We would like to be a neutral wallet, agnostic to the telcos," Saxena said. "I don't think that Alibaba will be acceptable to retailers and Alibaba will have to rethink its strategy." He added that, politically, the Indian Prime Minister "cannot allow a Chinese company to so completely dominate."

Oxigen has focused on trying to link up the largest banks to create a solid payments infrastructure. Oxigen today "connects to all of the leading banks in India" along with the top three telecommunications companies, Saxena said. "We have 150 million customers."

For authentication purposes, Oxigen has been able to connect its backend systems to the government's resident system, where more than 800 million have already been issued a digital identity. The Indian government is also preparing to issue licenses to businesses to handle bank payments, and Oxigen is ready to implement all security rules such a license will require, Saxena said. "That gives us an advantage."

The Indian mobile handset market is primarily Android-based, he said. "Android is dominating 75% to 80% of the market, maybe more. IOS is 5% to 6%," he said. But despite Android's overwhelming dominance, that doesn't appear to have helped the platform's homegrown wallet. "Google Wallet? It's not even talked about," Saxena said.

A major reason for that is that India—similar to the U.S.—is in the earliest stages of NFC acceptance.

"The ecosystem that is needed to support NFC is just starting to take shape," Saxena said. "We have about 700,000 point of sale devices. Maybe not more than 250,000-300,000 are NFC-capable," and much fewer are activated. Things will change quickly, though, "once you have a few million devices in the market. We do wish to move in that (NFC) direction."



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