E Wallets

Introduction

Digital payments are revolutionizing the entire payment system in India and everywhere around the world. They are rapidly replacing debit cards and credit cards. Your smartphone is now your wallet. You can pay, receive, transfer and transact in various other ways through these e-Wallets. They are convenient, faster and much secure than your plastic cards.

e-Wallets remove the unnecessary step of filling in your bank account details or card number while making an online purchase. They just require you to choose your e-wallet account and input the security code to complete the transaction. This feature has resulted in a spike of e-wallet users upward of 25% of all online transactions.

Indian consumers are very quick to adapt new technologies and applications. They started embracing e-wallets like fish to water. Latest study shows that India adopted digital payments at a whopping 1.5 times the global average. Mobile wallet transactions saw an increase of 40 times in the past 5 years. The providers have now flooded the market with a number of options for the consumers to choose from. With attractive discounts and offers, consumers are enjoying multiple e-wallets to make the best use of all the offers.

What are e-Wallets?

The digital wallet also known as "e-wallet" refers to an automated system, an online service or a software application, that allows a person to make electronic transactions with another person to conduct digital money transactions for goods and services. It is a per-equipped electronic wallet that, much like a regular wallet, is used by consumers to perform transactions quickly and safely.

In comparison to bank accounts, e-wallets are known to be a quicker form of financial transactions. The operation is the same as a credit or debit card. The e-Wallet must be connected to the individual's bank account, debit card or credit card in order to carry out transactions.

Applications of e-Wallets in India

e-Wallets are a form of digital account where the user can save his / her account information for any possible online purchases. e-Wallet is protected by a secure password known only to you. Using an e-Wallet, you can make payments at grocery shops, online e-commerce sites, mobile bills, DTH recharges, and flight tickets, among others.

An e-Wallet consists mainly of two elements, software and information. The software part stores sensitive information and offers authentication and data protection. The information portion is a database of details input by the customer, including their identity, mailing address, payment process, amounts to be paid, credit or debit card details, etc.

It's very quick to set up an e-Wallet account. The user just needs to install the app on his / her phone and enter the necessary details. When you reach the payment page, the e-wallet would automatically fill in the user details on the payment form. The customer has to input his password to access the e-wallet. If an online request has been made, the user is not expected to fill out the order form on any other website as the information is stored in the database and processed automatically.

Types of e-Wallets in the Indian market

Mobile wallets are used for a wide range of transactions, including shopping online, merchant payments, payment of goods and services such as financial services or even transactions at an ATM. However, the extent of their use depends on what type of wallet you have.

Electronic wallets do not usually pay interest to consumers; it is owed to the companies that run them. It all depends on the kind of wallet you have. According to the Reserve Bank of India (RBI), there are three types of wallets in the Indian market:

• Closed
• Semi-Closed
• Open

Closed e-Wallets

Closed wallets are issued by a company, specifically to its customers only, for use on its own platforms only. Some examples of Closed Wallets are Flipkart.com, Makemytrip.com or Bigbasket.com. These Closed Wallets are generally used to credit any refund due to cancellation or return of an item or service. You usually cannot load any of your money into these wallets from your bank account or credit card.

Semi-closed e-Wallets

The best example of a semi-closed e-wallet is Paytm. These wallets may be used for both online and offline purchases including the purchasing of goods and services, financial services, payment of charges, premiums, etc. through / to sellers who have a clear arrangement with the provider to allow that payment instrument.

As these wallets are managed by non-banking entities (banks and non-banking financial entities cannot issue semi-closed wallets), they are forced to deposit this money with a partner bank through an escrow account. The interest in these deposits depends on the deal between the payment service provider and the bank.

Other examples of semi-closed wallets are Freecharge, Citrus, Oxygen, Airtel Money, SBI Buddy, mRupee, PhonePe, etc.

Open e-Wallets

Open wallets can be issued by banks or by entities in partnership with banks only. Open wallets allow all kinds of transactions including sending and receiving funds, along with transactions at ATMs. M-Pesa by Vodafone and ICICI bank, Pay Zapp by HDFC Bank, etc. are a few examples of open wallets in India.

How to use e-wallets?

e-Wallets are conveniently downloadable mobile apps that can be installed and used on your smartphones. The interface is dynamic and is being made more and more user-friendly every day. The e-wallet market is very competitive and the providers are going to great lengths to provide the best digital payment experience to its users.

Here are the simple steps to start using an e-wallet: 

• Download your preferred e-wallet app on your smartphone. Most e-wallet apps are available for both Android and iOS.
• You will be required to verify your bank account using your mobile number. Make sure that the SIM card with the mobile number is on the smartphone you are using the app on.
• Some e-wallets will require you to undergo the KYC compliance process. Follow the onscreen instructions to complete that.
• You will then be required to choose a VPA/UPI ID.
• The next step is to set the security PIN. Most wallets have a 6-digit PIN. Some may have 4 digits too.
• Once you have set the PIN, you are ready to go. 

You can use mobile wallets directly on your smartphone to buy online, pay to retailers, transfer money to friends & family, charge mobile & DTH, and even pay utility bills right from home. Provided that mobile wallets answer the need to carry hard cash anywhere, you too might be searching for a decent and secure alternative to fulfil your needs and requirements.

You can also conduct transactions in leading ecommerce sites, at offline merchant establishments, supermarkets, malls and restaurants. It is also worth noting that the use of certain programmes opens the door to amazing offers and benefits for you. Coupons and discount sites will help you find fantastic sales and discounts. In addition, mobile wallet technology also has a proven track record of maintaining a superfast and safe checkout process as there is no need to exchange personal information such as debit card numbers, bank account number, CVV, etc.

How to transfer money to friends and family using e-wallets?

Once you have created an e-wallet, it is very simple to send money to your contacts.

• Login to your e-wallet app. 
• Make sure that the contact number of the person is stored on your phone. 
• Click on ‘Pay’ or whatever relevant option you have for money transfer. 
• You can send money using the UPI ID of the other person, send to a phone number, send to a bank account using account number and IFSC code and to a person you have recently transacted with.
• Choose the relevant option to make the transfer. 
• You will be required to enter your security PIN. 
• Once the transaction is authenticated, the money will be transferred to the person’s account.
• Both of you are notified via SMS and App Notification about the transfer.

How to make bill payments through e-Wallets?

With e-wallets, you can pay bills for a number of service providers; mobile postpaid connections, utility bill payments, insurance premiums, DTH bills, broadband and internet bills, and many more. Here is a simple process to pay your bills through your e-wallets:

• Login to your e-wallet app. 
• Choose the biller to whom you want to make the payment. 
• Enter the bill amount and click ‘Pay’. 
• Enter the security PIN to authenticate the transaction. 
• The bill is paid and you will receive a confirmation from the biller

How to pay for purchases using e-Wallets?

• You can pay for purchases using your e-wallet on a number of online shopping sites.
• Add the items you want to purchase to the cart and proceed to checkout.
• In the payment options, choose ‘Wallets’.
• Select your e-wallet option. You will be asked to enter the security PIN to complete the transaction.
• The amount is directly debited from the wallet account and credited to the buyer’s account.
• Your purchase is now complete.

Top e-Wallets in India

PayTm

Paytm is India's largest financial services firm providing an entire range of online payments & financial solutions to customers, online retailers and service partners. Paytm serves as a payment gateway to customers and merchants to make seamless payments from cards, bank accounts and other e-wallets. Paytm also provides a range of payment facilities, such as mobile recharges, bill payments, movie tickets, taxi, train and flight tickets, loan payments, insurance, forex, etc. Consumers can directly link their bank accounts and credit cards to their Paytm account to make seamless payments on different retail and online ecommerce sites.

Amazon Pay

Amazon Pay is an online payment processing service owned by Amazon. It was launched in India in February 2019. It works in collaboration with Axis Bank for the UPI IDs. Customers are allowed to link their bank account to their Amazon mobile app and make payments quickly, easily and securely, directly from their bank account. Customers will be allotted an Amazon Pay UPI ID to buy on Amazon.in or the Amazon App as well as make payments for their regular needs, including mobile recharges and bill payments, without accessing their bank accounts, debit card or credit card or going through the hassle of authentication in their banking system.

Amazon uses UPI (Unified Payments Interface) of India to allow customers to pay for goods and services on the Amazon site or other merchant sites. Amazon Pay can be linked to multiple bank accounts and you can choose the bank account you want to effect the payment from at the time of checkout. You can also load money into your Amazon Pay account through your credit card or debit card for faster checkouts at the time of purchases on Amazon App or Amazon.in.

Google Pay

Google Pay is a mobile payment platform and an electronic wallet built by Google to facilitate in-app purchases and tap-to-pay transactions on mobile devices, allowing users to make payments on Android phones, tablets or watches.

You can pay the merchants using the QR Code, their Phone number or Bank Account numbers with IFSC Code. Google Pay takes advantage of physical verification, such as fingerprint ID, where available. Google Pay is enabled with a passcode on smartphones without a fingerprint ID. When a customer makes a payment to a retailer, Google Pay does not include the customer's account details with the transaction. Instead, it creates a virtual account number that represents the details of the user's account. This system keeps customer payment records confidential and provides a one-time authentication code instead of a card or device data.

Jio Money

Jio Money is a payment and financial services that can be accessed through your My Jio App.  Jio Money is easy to register and start using. It is linked directly with your bank account and lets you pay for your purchases directly from your bank account. It also works with any operator; 2G, 3G or 4G networks.

PhonePe

PhonePe is yet another successful mobile wallet that initially originated as a simple wallet to be used for mobile phone recharges and bill payments. Later, it was absorbed by the e-commerce giant Flipkart, which further incorporated PhonePe as its own wallet, making it very convenient for users purchasing on Flipkart.

This wallet includes several other features such as transferring money via UPI / Bank Transfer / Direct Wallet to Wallet Transfer. You also have the option of dividing bills between friends who are not accessible in Paytm or most other wallets.

You can also charge mobile / DTH, pay electricity, landline, gas, water, data card, and internet bills. You can also pay insurance premiums, local taxes and purchase gold. It's way ahead of Paytm when it comes to the amount of options they offer for your household management.

Freecharge

Freecharge provides fantastic cashback offers to customers. The free mobile wallet can be used to charge mobile phones, fill gas and energy bills, and most importantly, MetroCards, which are also a great relief for busy workers who hurry to metro stations early in the morning and are frequently irritated by long lines.

You can also get simple credit via FreeCharge EMI, send money through UPI or bank transfers, and also invest in mutual funds. The app has a rather basic and lightweight UI and borrows most of its functionality from Paytm, except for the two options mentioned above.

Freecharge mobile wallets can be used to trigger an anonymous purchase process on leading e-commerce online shopping platforms such as Snapdeal, FindMyStyle and ShopO. You can also connect your JioMoney and PhonePe accounts to FreeCharge for a smooth payment experience.

MobiKwik

MobiKwik is one of the fastest growing online payment platforms with a digital wallet infrastructure consisting of state-of-the-art technology. The MobiKwik digital facility is extremely valuable for the purpose of making payments to numerous online traders.

MobiKwik has collaborated with twelve power boards across eight states of India, allowing the common man to stop waiting in long lines for electricity bill counters to pay bills. They will now pay their bills more easily with a digital wallet scheme. Also, MobiKwik's digital wallet scheme is heavily encrypted, and the odds of getting compromised are slim.

MobiKwik digital wallet also allows you to offer a massive amount of cash back bonuses that typically range from about 30 - 50%. In comparison, as the holiday months come in, the cashback rates often get much better.

Advantages and Disadvantages of e-Wallets

e-Wallets offer a plethora of benefits to its users: 

• It provides more comfort to several customers.
• It gives access to several other types of cards.
• It's offering more security.
• It can be found in most supermarkets and online retailers.
• It enables consumers to approve each transaction.
• It can give you access to new incentives.
• It could help you with cutting costs.

e-Wallets have their own set of disadvantages too: 

• It is not entirely accessible throughout the world.
• It always needs you to carry something with you.
• It needs your device to be fully charged.
• It doesn't totally reduce the security threats
• You could be charged more for handling payments.
• It could promote irresponsible spending.

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