Interview Questions › Root Cause Analysis

Digital wallet transactions dropped by 30%

Monthly stored-value wallet peer-to-merchant transaction volume plummeted 30% over the last quarter. Explain this major structural shift.

Context

Total app active users and bank-to-bank UPI transactions are at all-time record highs on the platform.

Clarifying questions to ask first

• Did overall platform transactions drop, or did wallet volume specifically shift to direct bank UPI?
• Were there recent RBI / central bank KYC compliance deadlines?

How to approach it

1. Examine user substitution behavior: Are wallet users migrating to direct UPI / Credit on UPI rails?
2. Investigate regulatory changes (KYC compliance mandates, wallet loading limits, interchange fees)
3. Analyze merchant acceptance fee changes for wallet payments vs zero-fee UPI
4. Segment transaction types: P2P, Offline QR Merchant, Online In-App, Utility Bill Payments

Framework: Cannibalization & Product Substitution -> Regulatory Compliance Changes -> Merchant Economics & Friction -> User Experience Differences

Sample answer

• Internal cannibalization: zero-friction UPI auto-pay replaced wallet top-ups
• Regulatory deadline required full biometric KYC for wallet balances, locking non-compliant users
• Merchants disabling wallet acceptance due to new 1.1% interchange surcharge

1. Internal substitution analysis: 92% of the lost wallet volume migrated directly to Bank UPI; total platform GMV grew 14%

Natural product cannibalization driven by frictionless bank UPI adoption, accelerated by central bank wallet KYC mandates; repositioned wallet as high-speed micro-payments ledger.

What interviewers look for

• Wallet Transaction Count
• Direct Bank UPI Volume
• Full-KYC Wallet User Ratio
• Merchant QR Acceptance Rate