Propelling technology into full swing, paying your bills now has a whole new outlook. Mobile Wallets are now a fad that is not only catching the eye of e-commerce and telecom firms but also the Indian consumer. Here’s taking a closer look into the change it brings about and the pros and cons of mobile wallets.
Modes of money transactions have made a major shift in recent years. We have moved from hard cash to plastic. Those teeny plastic cards have more of a sense of entitlement than hard cash ever gave us. It is safer to use, more convenient and faster than ever before. A host of companies, mainly in the e-commerce and telecommunication sector have seemed to make their mark on Mobile Wallets to enhance their consumer purchase experience. All you need to do is pre-store your money and you’re all set to use it for a number of services or to transfer it to other accounts.
It is no doubt that with change being a constant, we always try to look for – better, faster, easier. The advent of Mobile Wallets is that “better, faster and easier” option.
A mobile wallet is a virtual storage system that stores your money, coupons and a digital certificate of your identity. It takes your online payment process a few steps down. There is still a majority of people these days that prefer to make hard cash payment. But the fact that the number of these people is dwindling and the usual need for “loose change” is a growing frustration is no surprising matter.
Mobile wallets act as portals that let you store a certain amount of money, that can directly be used in exchange of services, utility payments, prepaid mobile/DTH charges etc. from supported merchants, rather than pulling out your plastic at every turn.
There are predominantly three kinds of Mobile Wallets according to the Reserve Bank of India, mainly – closed, semi-closed and open.
Closed Wallet: When a company issues a wallet to it’s consumers exclusively for the purchase of in-house goods and services, it is termed as a closed wallet. A closed wallet does not give you the advantage of cash withdrawal or redemption. These instruments are growing in popularity and are undertaken by most big players. Flipkart, Jabong, MakeMyTrip etc. have all adopted this system and basically provide you with an account where money gets credited in case of a refund caused due to a cancellation or return.
Semi-Closed Wallet: In the digital money sphere there are a number of companies that offer semi-closed wallets such as Paytm, PayU, MobiKwik etc. According to the RBI a semi-closed wallet is a payment instrument that can be used for the purchase of goods and services (as well as financial services) at merchant locations or establishments that have a contract with the issuing company to accept said payment instruments. Just like the closed wallet it does not offer you the convenience of cash withdrawal or redemption.
Open Wallet: This wallet we are most familiar with. It includes a payment instrument that lets you purchase goods and services (as well as financial services) at merchant locations and at the place of sale as long as they accept cards. It also gives you access to withdrawal of money at Automated Teller Machines.
In simpler words it is your everyday, reliable credit/debit cards. Banks of course can only issue these kinds of wallets.
Tick Tock: It is no surprise that the mobile wallet makes life much easier than before. Usually when you make a payment using a debit/credit card these transactions require you to enter in some of your critical information regarding your account or card and then authorize the payment gateway. There is even a secure pin or an OTP sent to your phone as you go running your hands through your pocket waiting for it to buzz you the code. But with the mobile wallet, all you need to do is log into your account, thus making the entire hassle just a little faster.
Bread Crumbs To Your Spending: Who does not want to optimize their spending? Mobile Wallets let you track your every move, whether it is an amount you are adding to your account, or an amount you are spending. This helps you keep a tighter track of things. Besides, you can always set a limit to your purchasing tendencies by adding only a specific amount to your wallet for expenditure.
Safety Comes First: Unlike your usual online monetary transactions, Digi-Wallets don’t require you to share any of your account or credit/debit card information every time you make a purchase. It lowers the chances of anyone getting access to your bank account. They also use highly strict methods to protect all of your data. RBI Authorized payment gateways are used with all the information being encrypted, making it impossible for even the wallet providers to access your information. There is no safer feeling than that.
In addition, mobile wallets in India have a maximum limit of Rs.10,000 that can be stored, so it is typically used for payments towards smaller services and purchases. This is what makes the entire process so simple and convenient, reducing your risks.
Cha-Ching With The Coupons: Almost all the mobile wallet providers offer numerous discounts on a variety of merchants. They are either cashed as coupons or cash-back on purchases. Ola Wallets -A simple example of the Mobile wallet is the one introduced by Ola Cabs. They even recently launched their wallet with an offer to double the amount you store in your account. This is not counting the exclusive offers, coupons and discounts you get from time to time.
Cumbersome for the traveler: Although thoroughly packed with prospects, the Mobile Wallet does have a few drawbacks. Every country has it’s own set of mobile wallets, making it impossible for the avid traveler to use the digi-wallet services of his own country elsewhere.
What happens when there is no battery?: These e-wallets rely heavily on the use of devices such as your laptop, tablet, phone etc. Got your device, got your money. In situations where your technology fails on you or you run out of battery, the mobile wallet can be of no financial help. There is no denying the classic effect of cash.
Cold Hard Cash: In fact it is proposed that in India people still rely on withdrawing cash from the ATM and then making a payment. The RBI data for the year 2013 indicated that the use of debit cards at a merchant’s outlet was at a meager 5% as compared to the value transacted.
Are We There Yet? Every new step in technology takes a tad bit of time to become a phenomenon and Mobile Wallets are no exception. Most mobile/DTH operators are onboard with providing you this service, but there are still a lot of companies out there that are not on board. Online shopping websites like Amazon and a majority of other utility services still do not offer this feature.
You Have To Admit: There is no shortage of scope in this new form of payment. To make things simpler supermarket chains, telecom operators, prepaid instrument players etc. can open such payment banks and accept a deposit that will enable them to offer some basic services and facilities.
This digital payment service is growing at an exponential rate. There is also talk about an interest earned on this payment by the companies. It depends on the amount agreed on between the bank and the company. In case of semi-closed wallets, the payment company handles the entire process of money transaction. “These wallets are handled by non-bank entities. As per regulations, we need to keep the money in an escrow account,” said Jitendra Gupta, founder and managing director, Citrus Payment Solutions.
“We have to maintain the escrow account with a bank. RBI has made an exemption for us on earning interest on the funds lying in the account. A formula is used to arrive at the average balance on which one can earn interest, say, on the average balance of 52 weeks. Depending on the mutually accepted conditions between the payment company and the bank, an interest is paid to the payment company. This interest is in the range of 4-6%. None of the wallets pay interest to customers,” he further explains.
Let’s Catch On: There is still much contemplation about the success of the concept in today’s times. We on the other hand like to believe that this revolutionary method of payment is catching on like fire. You can easily use these services in replacement to your credit/debit card by picking them out during your checkout. If your seller supports your wallet, then it is just the matter of filling in your basic credentials and the payment is made!
