INTRODUCTION:

Transaction-based incentives work to increase mobile pay spend, shopping frequency and
brand loyalty, offering major opportunities for pay-app providers and merchants. There are
basically two types of rewards that are given by any mobile pay-app in India: monetary or non-
monetary. Non-monetary are in the form of discount coupons for food, movies, flight or train
tickets, etc. These rewards are targeted to motivate users to order food/book tickets from the
pay-app and hence engage in repeat transactions from the app. There are also monetary
benefits that are either fixed or random/luck based. The fixed monetary rewards are generally of
the type: 10% cashback, Rs50 cashback on transaction, etc. Random monetary rewards can
range from zero to any figure. The scratch cards from Google pay or PhonePe are examples of
random monetary rewards. These rewards can further be restricted or unrestricted. Unrestricted
rewards are the ones that are credited (or can be used) instantly. There are no limits or
conditions attached to them. Restricted rewards are the ones that are credited after certain
activity (e.g. receiving cash-back after return period of an order is over)

Problem Statement: The reward systems of digital wallet platforms differ according to the
nature and frequency of their rewards. In our study, we will try to find out if the type of reward
affects brand loyalty for the platform. We also aim to rank the rewards according to user
preference.

The types of rewards being studied by us are:

1. Restricted/Unrestricted rewards
2. Non-monetary rewards
3. Monetary rewards
a. Fixed
b. Random
.
METHODOLOGY

To understand the effect of reward systems in mobile wallets on users, we will be conducting a
study. This will be done through survey and experiments. There will be around 100 respondents
for the experiment involving three different reward scenarios.

Also, our respondents will belong to the age group of 18-30. We have chosen this particular
cohort because they use multiple payment apps and are familiar with the reward system of
each. Thus, they will have their perceptions regarding the benefits which would help us
understand users’ preference of the varying reward systems.

The questionnaire is aimed to gauge the interest of consumers and their reason behind using a
particular e-wallet over another. The survey will also determine the effect of rewards and
rebates over usage pattern of e-wallets like Google pay, PhonePe, Paytm etc.

A blinded experiment of 100 consumers will be conducted in which the respondents will be
asked to choose between two types of wallets. One which would give cashbacks of 0 INR, 10
INR and 100 INR. The other wallet would give only non monetary offers. This will test the loyalty
of customers towards e-wallets and the changes in their usage preference/behavior when they
do not receive cashbacks versus when they receive a 100 INR cashback. It will also help us
understand if, and to what extent they are inclined towards non monetary offers from e-wallets.

We will be performing T-tests and Anova tests on the survey and experiment data to find out
whether the reward offers have a significant effect on the usage pattern of digital wallets. If there
is a significant effect then which type of reward contributes to it the most and suggest how to get
maximum value out of customers using these rewards.

SURVEY ANALYSIS

The most commonly used Wallets by the respondents were Paytm, Google Pay, Amazon Pay,
Airtel Money, and PhonePe (Figure 1 in annexure). Most common attributes considered while
choosing a wallet is Cashback offers and Wider Reach (Figure 2 in annexure). Preference
towards Monetary rewards on wallets is much higher as compared to non-monetary rewards
and hence selection preference towards app which gives higher monetary benefit is also higher.
Respondents were even ready to sacrifice higher Cashback if they are getting instant discounts
in wallets. This can be the reason behind Easemytrip’s growth as flight booking app over Paytm.
Respondents when asked about the preference towards occasional high reward over smaller
but frequent guaranteed rewards, they were ready to sacrifice uncertain high rewards over
guaranteed smaller but frequent rewards. This can be seen in the tremendous increase in
Google Pay users over Bhim and PhonePe.
Respondents were skeptical whether to go for discount coupons (movie tickets, food coupons)
over small monetary rewards. Preference towards popular and user-friendly interface over
rewards is higher reflecting consumer reservations and doubts in believing not-well known app
or app which is difficult to use. This can be seen in the slow growths of newer apps than Paytm
as preferred wallets during the time of demonetization.
Respondents were also ready to complete a series of transactions to achieve a reward, thus
reflecting the importance of monetary rewards for the consumers. This trend can be seen clearly
in the case of Google pay when consumers performed 5-7 transactions per week in the hope of
getting small monetary rewards. Respondents preference towards single application over
multiple options was also higher, reflecting the difficulty faced in customer acquisition for new
entrants. In case of multiple reliable options, consumers preferred switching between multiple
options providing promotional offers. Preference towards discount coupons over monetary
rewards depended on the nature of discount coupons (coupons such as movie tickets, food
coupons were preferred over flight coupons/hotel booking vouchers), timeframe to use that
reward option.

EXPERIMENT & DESIGN

Our surveys aimed to find out if the frequency and type of rewards affected the user’s
preference for a particular digital wallet. The respondents were divided into two groups. One
group was sent a form asking them about the frequency and amount of monetary rewards and
their likelihood of switching wallets if they hadn’t received cashbacks in the last five
transactions. The other form focused on the frequency of each type of non-monetary rewards
(e.g. movie vouchers) and the user’s likelihood of switching wallets in case they did not receive
any rewards in the last five transactions. At the end, both forms asked respondents to rank
vouchers, merchandise discounts, travel tickets discounts, guaranteed and probable cashbacks.

Before making the forms, we had a few unstructured interviews with people. There was an
overwhelming preference for cashbacks. People felt that even if the amount was insignificant,
the relatively greater frequency generated considerable savings. Many pointed out they were
unable to find opportunities to avail vouchers and discounts within the time limit. We felt that in
order to unbiasedly measure stickiness, we had to ask respondents about monetary & non-
monetary rewards without bringing up a comparison. Hence, we floated two separate forms for
each type of reward. Each form was filled by approximately forty respondents.

During this stage, we also figured out that digital wallet users measured intervals between
rewards in terms of the number of transactions and not in units of time such as days or weeks.

MONETARY REWARDS (FINDINGS)

When asked about preference for the amounts (INR 0, INR 10, INR 20), none of the
respondents were indifferent to the amounts of the cashbacks (as expected). An INR 20
cashback was preferred more than an INR 10 cashback which was in turn preferred over no
cashback. However, most people received maximum cashbacks in the range of INR 0-10 and
minimum cashbacks in the range of INR 20 &above. Around 87% of the respondents said that
they would repeat transactions on the wallet if they had received a cashback in their last five
transactions. There was an overwhelming preference for sure-shot cashbacks of INR 10 which
were followed by probable cashbacks of INR 50. (Pie-charts for each rank are in the
annexure.)Around 50% of the respondents reported that they would switch wallets if they did not
receive any cashback for their last five transactions. Respondents cared more about the
frequency of the transaction than the amount. According to the responses regarding monetary
rewards, they preferred small but repeated cashbacks over other types of rewards. So,
frequency of cashbacks determines stickiness to a particular wallet.
NON MONETARY REWARDS (FINDINGS)

When asked to choose between ticket vouchers, travel discounts and merchandise offers,
38.5% respondents preferred movie tickets as their first choice.
To measure their stickiness toward rewards, we asked them how likely they are to switch if they
don’t receive rewards in five consecutive transactions and 46.2% respondents replied that they
are very likely to switch. 61.5% of respondents are very likely to continue with the same wallet if
they receive a reward.

RESULTS AND CONCLUSION

Based on the survey and experiment, it can be concluded that respondents preferred monetary
rewards over non monetary rewards. Respondents would instead of preferring higher
cashbacks in future preferred instant discounts in present. Google Pay was preferred over
Phone Pay or Paytm because of guaranteed small but frequents monetary rewards. The data
collected also showed that respondents are very like to repeat a transaction on a wallet if they
have received a reward in previous five transactions and they are very likely to switch wallets if
they have not received any reward in last five transactions.

MANAGERIAL IMPLICATIONS

E-wallet companies should continue to give small monetary rewards to users to ensure that they
don’t switch wallets. They should also ensure that their wallet’s interface is user friendly and
regularly updated as users preferred it over discounts or cashbacks.
Managers should ensure that the algorithm that they use to give rewards should give some
monetary reward to customers in at least one out of five transactions.
Customers prefer movie tickets discounts over any other non monetary rewards , there movie
ticket discounts should be given more frequently.

LIMITATIONS

1. The e-wallet industry is very dynamic with new payment gateways and reward systems
evolving at a high pace.
2. The consumer behavior may vary as per other situations and they might behave differently for
selecting one gateway.
3. There may be multiple other reasons than covered in the purview of this study.
APPENDIX:

INSTRUMENT/QUESTIONNAIRE FOR SURVEY:

Imagine you wish to perform a monetary transaction using an e-wallet. You find numerous
options available through various third-party applications which reward you for performing
transactions. We would like to ask certain questions to understand your usage behavior.
Please provide your genuine responses to the statements mentioned below.

1. Which e-wallet do you use? ________________________________________________

2. What attributes do you see while choosing the e-wallet?

a. Wider Reach
b. Cashback Offers
c. Instant Money
d. Non-monetary rewards (E.g. Free movie tickets)

3. I would consider monetary rewards

Very Unlikely Very Likely
1………….2………….3………….4………….5…………….6…………….7

4. I would consider non-monetary rewards

Very Unlikely Very Likely
1………….2………….3………….4………….5…………….6…………….7

5. I would consider the app providing the highest monetary reward

Very Unlikely Very Likely
1………….2………….3………….4………….5…………….6…………….7

6. I would prefer instant discount over even a higher cashback

Very Unlikely Very Likely
1………….2………….3………….4………….5…………….6…………….7

7. I would prefer occasional high rewards over smaller frequent guaranteed rewards
Very Unlikely Very Likely
1………….2………….3………….4………….5…………….6…………….7

8. I would prefer discount coupons(on movie tickets, food coupons etc.) over small
monetary rewards
 Very Unlikely Very Likely
1………….2………….3………….4………….5…………….6…………….7

9. I would prefer a popular and user-friendly interface over rewards

Very Unlikely Very Likely
1………….2………….3………….4………….5…………….6…………….7

10. I won’t mind doing a series of transactions to achieve a reward

Very Unlikely Very Likely
1………….2………….3………….4………….5…………….6…………….7

11. I prefer using only one application over multiple options

Disagree Agree
1………….2………….3………….4………….5…………….6…………….7

12. I look for the reliability of the application over rewards

Disagree Agree
1………….2………….3………….4………….5…………….6…………….7

13. I would prefer discount coupons over small monetary rewards even if I have to wait to
avail those discount coupons
Very Unlikely Very Likely
1………….2………….3………….4………….5…………….6…………….7

14. I prefer switching between multiple e-wallets options providing promotional offers
Very Unlikely Very Likely
1………….2………….3………….4………….5…………….6…………….7

15. I would prefer using an e-wallet having a dynamic reward system even after multiple null
rewards with the expectation of receiving guaranteed reward the next time
Very Unlikely Very Likely
1………….2………….3………….4………….5…………….6…………….7
QUESTIONNAIRE FOR EXPERIMENT

Monetary Rewards

1. Rank the following cashback amounts according to preference: INR 0-10, INR 10-20 and INR
20 and above.

2. Rank the cashbacks according to the frequency you receive them : INR 0-10, INR 10-20, INR
20 and above
3. If you have not been receiving cashbacks for 5 or more consecutive transaction, how likely
are you to continue making the transactions via the wallet?
Very Unlikely Very Likely
1………….2………….3………….4………….5
4.If you have not been receiving cashbacks for 5 or more consecutive transaction, how likely
are you to switch the wallet?
Very Unlikely Very Likely
1………….2………….3………….4………….5
5. If you have received a cash aback/reward in one or more of your last five transaction, how
likely are you to continue making the transactions via the wallet?
Very Unlikely Very Likely
1………….2………….3………….4………….5
6. Rank according to the preference : Movie ticket voucher (Max INR 100 off), Travel ticket
discounts, Discount on merchandise, Sure shot average cashback of INR 10 in next two
transactions, Probable cashback of INR 50 in the next two transactions

Non Monetary Rewards

1. Rank according to your frequency of receiving each reward on a digital wallet- Movie
vouchers, Travel ticket discounts, Discount on merchandise
2.If you have not been receiving non monetary rewards for 5 or more consecutive transaction,
how likely are you to switch the wallet?
Very Unlikely Very Likely
1………….2………….3………….4………….5

3If you have not been receiving non monetary rewards for 5 or more consecutive transaction,
how likely are you to continue with the wallet?
Very Unlikely Very Likely
1………….2………….3………….4………….5
4If you have received non monetary rewards on one/more of the last 5 transactions, how likely
are you to continue with the wallet?
Very Unlikely Very Likely
1………….2………….3………….4………….5

Personal Details (Optional)

1. Gender: Male/Female
2. Age: ______ years

FIGURE 1

Phone Paypal,
Pay, 4 2

Airtel, Paytm,
5 16
Amazo
n, 6
Google
Pay, 11

FIGURE 2
ANOVA TEST

Null and Alternative Hypotheses

The following null and alternative hypotheses need to be tested:

Ho: μ1 = μ2 (Monetary Rewards Mean= Non-Monetary Rewards Mean)

Ha: Not all means are equal

Significance level is alpha (α) =0.05

Monetary Rewards Non-Monetary Rewards

Sum 181 121
Average 6.033333333 4.033333333
∑i( (Xij)^2 1167 585
Std. Deviation 1.608 1.829
SS 74.9666 96.9666
Sample Size (n) 30 30

Total Sample size is N=60, total degrees of freedom, df (total)=60−1=59, between-

groups degrees of freedom df (between)=2−1=1 and the within-groups degrees of
freedom are df (within)=59−1=58

Sum of squared values is 1167+585=1752; Total sum of squares (SS total) is 231.922

The within sum of squares (SS within) is 171.933; hence SS between = 60

Mean Sum of Squares Calculation:

MS between = 60 and MS within = 171.933/58=2.964

F-Statistic = (MS between)/( MS within)= 60/2.964= 20.2404

The p-value is .000033 and f-ratio value is 20.2404

Using the P-value approach: Since p<0.05, it is concluded that the null hypothesis is
rejected. Therefore, there is enough evidence to claim that not all 2 population means are
equal, at the alpha = 0.05 significance level.

Based on the average rankings for Monetary and Non-Monetary rewards and ANOVA test,
we can safely assume that both are not considered equally by the consumer with more
importance given to the Monetary Rewards.