In 1981, the first credit cards were launched in India. Later, debit cards were issued. There are 57.4 crore debit and credit cards in circulation. It means on an average 1.6 crore cards a year. The number of mobile wallets in the country is 11.5 crore. They were first launched in 2007. That comes to an average of 1.4 crore a year.
It is the philosophy of keeping the common man at the centre. The ability to innovate is another tenet these start ups bring forth. CitrusPay, Oxigen, Paytm have forced the established bankers to take notice. All traditional bankers have now mobile apps.
RBI expects double authentication and that has given mobile wallets and upper hand. Mobile wallets provide seamless payments to cab operators. A large number of customers are reluctant to log in to their bank accounts for minor transactions as they fear electronic fraud. They, therefore, prefer e-wallets.
Does it make sense when bank account in a bank has already a wallet? It is just a way to circumvent the second factor authentication by putting up a wallet. A wallet just holds money. So does a bank account Banks have become fond of the word “wallet”.
According to Paytm, it is a platform for transactions and banking is a platform for savings. Paytm drives cash users to move to online transaction.
Indian banking has taken cognisance of the bottom of the pyramid by moving into digital space and by financial inclusion, having opened accounts under the Jan Dhan Yojna.
Types of Wallets
There are four types of mobile wallets.
Open wallets allow you to buy products and services, enable you to withdraw cash from ATMs or banks and transfer funds. These services are launched in collaboration with a bank. M-Pesa ( Vodafone and ICICI ) is one example.
Semi-open wallets allows you to transact with merchants that have a contract with the wallet company. You cannot withdraw cash. You are supposed to spend what you load. Airtel Money is an example of semi-open wallet.
Closed wallets are popular with e-commerce companies. You have to lock a certain amount of money with the merchant once there is cancellation or return of the order. Gift cards are also closed wallets.
Semi-closed wallets do not permit cash withdrawals or redemption. They allow the buying of goods and services at listed merchants and perform financial services at listed locations. Paytm is an example of semi-closed wallet.