A wallet is essentially a pre-paid instrument into which you load cash either at a physical store or using online banking. It can exist as a paper voucher, plastic card or a virtual wallet which is accessible online.

Internationally, wallets find favour with unbanked population so as to pay bills or buy stuff, you need not have a bank account. In the USA, there is undocumented migrant population with no access to a bank account. Prepaid wallets are one way to overcome this financial exclusion.

India recently widened the reach of banking. Most of the account holders have debit cards. Then why to store money again on mobile wallet? Besides, wallets have a ceiling on money that can be stored in it if no documents are submitted. What is the USP of a wallet, as against the debit card ? As it is, there is no USP — both are mechanisms to pay . The distinguishing feature could be that there is no two-factor authentication — provide CVV and OTP while using the wallet.

This winning edge is lost, when the RBI now tends to permit small ticket transactions without this two-tier authentication.

Wallets have not been subjected to Know Your Customer checks. There could be fraud and money laundering. Wallets forefeit the unutilised amount at the end of the validity period. This is a hassle. Say you have Rs. 500 to your credit in the wallet. You pay Rs.475 for a taxi ride. You have still Rs. 25 left as balance. You will have to find online options to match this exact amount. Most of the times, such amounts are forfeited, as customers do not continue checking their balance.

Paynimo is a new product that creates a Super Wallet of existing debit cards, credit cards and bank accounts. It gives the freedom to decide how we want to pay. There is a virtual POS as a feature of these Super Wallets. The customer and merchant’s phone can be used to pay securely. It is an alternative to cash on-delivery. A super wallet could also have the facility to do one-time-use transactions ( just like virtual cards ). To do this it uses actionable-payment links, which expire after use within limited time. This avoids being exposed to theft.