Prepaid wallets. Here’s a concept that today need little or no explanation. Quite simply because our airwaves are littered with ads that explain the concept, either for Paytm, Freecharge, MobiKwik, or Oxigen. While many of us in the cities use one kind of prepaid wallet or the other, the scope of these smartphone centric services, truly comes to the fore in the Tier II and Tier III cities of this vast nation. Prepaid wallets like any other online payment service will take a while to gain widespread acceptance.
For starters the concept of a prepaid wallet is an interesting one and does warrant an explanation. Well, that’s what we’re here for, aren’t we?
What is a Prepaid Wallet?
Much like a regular leather/rexine/canvas wallet, that you fill with money, credit cards, bank cards and the like, a prepaid wallet is essentially a digital avatar of the same system. Just like your physical wallet has a certain limit to how much money you may load it with, depending on the storage space it affords, the prepaid wallet has the same limitation.
In much the same way as credit cards made physical wallets lighter, prepaid wallets aim to do the same, almost completely seeking to eliminate the need to carry cash on your person.
Problems in adopting Prepaid Wallets
The problem here however is manifold. For starters we are a nation that loves its paper money. I mean even today wads of 100 rupee notes stuffed into bags and trouser pockets (of the stockbroker/estate agent types) is not uncommon. ‘Rokda de, maal le’ is still the most overused term in the trader community. In all this the elimination of physical cash altogether is a dream that may never truly see the light of fruition. Then there are a slew of legal ramifications and grey areas that can hamper the adoption of this technology.
In the Americas, where prepaid wallets originated (remember PayPal anyone), these are a viable alternative to traditional banking in many ways. Not wanting to open a bank account, or not being able to open a bank account (sad but true) means that hundreds of thousands, if not millions of people are denied access to commercial convenience. Prepaid wallets there represent a viable alternative to traditional banking. Considering that you don’t really need any documentation or ‘know your customer’ validations, this means that the silent sections can avail of this informal standard of transactional commerce without anything untoward happening.
While the lack of documentation means convenience, on the flipside, the chances of misuse, abuse and foul play also increases exponentially. Since most of these services are app based, loss of one’s cell phone suddenly implies loss of more than just your photographs. Unfettered transfer of funds and ease of receipt of the same also means that criminals, money launderers and other undesirables now have a whole new way to transfer their ill-gotten gains around.
India however is a whole different ball game. Unlike the United States, it is infinitely easier for us, as citizens to open a bank account (thanks to multiple PM finance yojanas). With bank accounts of course, ATM cum Debit Cards abound. This means that many people simply have these pieces of plastic in their wallets in the first place. For many of us, that’s as cashless as we’ll ever want to be.
E-commerce may be booming, but as long as COD (almost universally available) is offered, online transactions are still nascent. Any statistician worth his salt will confirm that we have quite a way to go to catch up with the West in those terms. There is a sizable number of people who don’t really browse online, let alone make a purchase, so the traditional mind-set is another barrier that will take some breaking.
How prepaid wallets are enticing people to experience their convenience?
Inducements, freebies and special, custom made deals are all the rage with prepaid wallets. Paytm for instance today is as much an e-commerce shop offering cashback and discounts, as it is a payment gateway. Freecharge pitches the idea of more bang for your buck, with offers worth the amounts for which you recharge (this makes it especially popular amongst college goers). Payumoney on the other hand offers additional discounts on bills, recharges and other services. Inducements such as these seem to be working, but for them to keep you hooked, they need to be both consistent and long term. From a marketing perspective, offering a discount makes sense and it also works as quite a decent cross promotional tool.
Personal experience with prepaid wallets
My own experience with prepaid wallets have been a rather pleasant one. Let’s face it we all have lean periods during the month, and loading my Paytm wallet during the first half of the month really saves my bacon.
From late night Uber rides, to discounted merchandise, from easy payment for movie tickets to gifting vouchers to ‘hard to shop for’ friends, it has definitely made things a lot simpler for me. This however, by no stretch of the imagination means that I’m abandoning my credit cards or plain old cash any time soon. It just means that every so often, when I need to transact online in a hurry I don’t have to fumble around looking for my credit cards or cash.
For thousands of others like myself, prepaid wallets will always be a secondary source of transaction, like a virtual wallet of sorts.
Fad or the future, what is to happen of prepaid wallets?
It is easy to write off digital wallets as a fad, or a passing phase. Many do, and who is to say they are wrong? But as technology progresses and advancements are made, a lot has changed, and before long, a lot more will.
Innovations like super wallets, which allow you to categorise your existing credit and debit cards, and bank accounts and enable us to choose which of these to use for our various transactions.
With virtual POS being touted as a game changer in the e-commerce game, prepaid wallets may soon enable people to make virtual payments to agents during delivery of items, prepaid wallets may yet prove to be a viable alternative to cash-on-delivery.
Prepaid wallets also have another side to them. This of course means that we can choose to transfer cash to friends, associates and other prepaid wallet users, through them. Many industry analysts are of the opinion that this ‘informal payment gateway’ of sorts is where the true success of prepaid wallets.
Even banks have taken this factor into consideration, and major players like Axis and HDFC already have apps that enable account holders to make payments to friends through social networks like Facebook, Twitter and Whats-App. While in essence this isn’t the same as a prepaid wallet, the convenience aspect is something that most financial institutions are waking up to.
Ease of transactions is what most prepaid wallets bank on. But while convenience is definitely a factor, one aspect that leaves most of us quite sceptical of using these wallets are the safety of our financial data.
Fancy words like 128 bit encryption and others are always thrown around, but until we are convinced and share the same level of comfort that we do with our traditional banks (yes, even in the online space, with transactions and what have you) we will always be wary of using digital wallets.
Call it a fad or the future, digital wallets are making quite a splash. With inducements and the added layer of convenience while transacting online the biggest draws, what’s to say that we don’t especially ‘need’ a digital wallet?