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What is Mobile Wallet and how does it work?

Sep 27, 2018 15:21 IST

     

    Nowadays, mobile wallet trends are growing very fast, but do you know what is mobile wallet, how this technology work, what are the advantages or disadvantages of using it. Let us study through this article.

    First, we will study about Mobile Wallet?

    Mobile Wallet is a type of payment service through which individuals can receive and send money by mobile devices. It is a form of an e-commerce model designed for the mobile devices for the convenience and ease of access. Mobile Wallet is also known as Mobile Money or Mobile Money Transfer.

    It is the digital version of the wallet that you can carry in your pocket. It stores payment details like credit or debit card and cash balances which can be used to make payments.

    In other words, it is a digital technology to pay your bills online instantly without having to pay by cash or use your credit or debit card all the time. It acts like a virtual wallet, which can be preloaded with your preferred amount of money from your bank account or credit or debit cards and used to spend it online. You can simply use your smartphone or a tablet to make the payment. With e-Wallet apps installed on your mobile, you need not to carry cash in your hands every time. For example, if you go to a restaurant and use money wallet for the billing purpose. Then, it can only be possible if the restaurant is connected to a mobile wallet service provider. With this, you can easily pay bills from your mobile itself. You can also pay by app, text message, social media or website.

    What is the mobile wallet technology?

    These days’ smartphones are easily available and there seems to be an app for everything. "Mobile Wallet" technology is becoming more popular every day. It is a technique through which you can keep your debit or credit card information in your mobile in the digital form. Instead of using your physical plastic card to make a purchase, you can also pay by using your smartphone, tablet or smartwatch.

    Let's now study how does mobile wallet work?

    How mobile wallet works
    Source: www.citizensmn.bank.com

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    Customers can access all of the stored information simply by opening an app on their phones by entering a PIN, password or fingerprint and then select the information that they need to access. This app then utilises information transfer technology like Near-Field Communications (NFC) to interact with ready-to-pay terminals in the mobile wallet.

    - Mobile Wallet securely stores your credit or debit card.

    - They can also store your loyalty cards, coupons, tickets etc.

    - They communicate with the terminals using various techniques or technologies.

    Therefore, without a device that receives mobile wallet information, you will not be able to take advantage of this increasing popular payment mechanism.

    It can also be understood that in mobile wallet, you have to transfer money through your bank account, debit card or credit card or have to recharge it. Do you know that mobile wallet is both prepaid and post-paid but for pre-paid wallet there is a need to recharge it so that you can use this money for payment? If you are not able to use money for few days, then it will go back to your account. But in post paid mobile wallet, the account is linked with the wallet itself. So, when you spend money from your wallet, then money will be deducted directly from your bank account at the same time.

    How many types of mobile wallet are there?

    Types of Mobile wallet

    There are three types of mobile wallets available in India.

    1. Open Wallet

    This type of wallet can only be issued by the bank itself. They allow you to purchase goods and services, cash withdrawal at ATMs and to transfer funds. For example, Vodafone M-Pesa.

    2. Semi-Closed Wallet

    Semi-closed wallets have a specific contract with the issuer to accept the payment instruments. They will allow you to buy goods and services or perform financial services at clearly identified merchant locations. For example, Paytm

    3. Closed Wallet

    This is a very popular service. Basically, closed wallets are accounts issued by a company to a consumer for buying goods and services exclusively from that company. Here a certain amount of money is locked with the company in case of a cancellation or return of the order, or gift cards. For example, by making an account on apps like Ola Money, Book My Show, you can transfer money and use it only for the service provided by them. Neither you can withdraw cash from this wallet nor can you pay for other services.

    How to use mobile wallet?

    To use this wallet, first you have to open your account in that wallet that you want to use and for this it is mandatory to have a mobile number. After registering to this service, money can be transferred to the wallet with the help of a debit or credit card and then at the time of purchase you can use money wallet with the help of a smartphone or mobile.

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    Advantages of Mobile Wallet

    - Easy accessible: Using mobile wallet for day to day transactions is really simple to begin with. And for this you just have to download the app and create a user ID and password. It is as simple as logging in to your Gmail or Face book account from your smart phone.

    - It is simple to add or load money: You can add money to your wallet easily by net banking, credit card or debit card. With this you can save time in visiting a bank, queue etc.

    - Purse or any other type of wallet can be stolen or can be lost anywhere but mobile wallet is neither stolen nor lost.

    - In mobile wallet, money is stored according to your requirement and you don't have to share your debit or credit card details frequently. So, your money is safe.

    - Sometime payments done via cash are a problem. Like if you have to pay a bill of Rs 480.50 which is not in a round figure then you may face a difficulty but with mobile wallet payment can be done easily.

    - It is not necessary to carry cash every time and mostly mobile wallet provides services. You can shop anytime, anywhere from mobile wallet.

    - Ensures timely payment: You can also make use of the auto facility to make future bill payments automatically from your wallet balance on a pre-determined date.

    - Incentives and Promotions: We know that mostly the wallet comes with its own set of incentives. E-wallets give plenty of money saving offers through the discount, cash back, offers and free gifts. Also, you can make optimum use of promo codes.

    Disadvantage of Mobile Wallet

    - The mobile wallet technology is easy to use for those who are techno friendly and require a high-speed Internet connection. So, we can say that mobile network connectivity is the biggest impediment.

    - Very few merchants and shopkeepers are listed with the mobile wallet service provider.

    - Mobile Wallet has a limit for depositing the money and money that to be spent on the daily basis.

    - It does not cater to the needs of the entire population. Most of them are using simple cell phones. Plastic money and m-commerce has not yet caught up completely throughout the entire nation.

    So now you must have understood that mobile wallet is a type of digital purse. It can be used for money transactions etc. Or we can say that it is a virtual wallet present in a smartphone in which the money is stored in a digital form. In fact many wallet companies are offering attractive cash bank schemes etc. to their consumers. If you go for shopping and if it is connected to a mobile wallet service provider then the amount can be paid from the smartphone and also by other ways such as social media, app, website etc.

    Different e-Wallet / Mobile Wallet Companies in India

    E-Wallet/ M-Wallet

    Industry

    Company

    Bank Transfer Allowed?

    Mobile Platform

    Overall Rating (based just on online platform)

    Paytm

    Private

    One97 Communications

    Yes

    Androis iOS, Windows Phone, Ovi, Blackberry

    4.4

    MobiKwik

    Private

    One MobiKwik Systems Private Limited

    Yes

    Android, iOS, Windows Phone

    4.2

    Oxigen Wallet

    Private

    Oxigen Services India Pvt. Ltd.

    Yes

    Android, iOS, Windows Phone

    3.7

    Citrus Wallet

    Private

    Citrus Pay

    Yes

    Android, iOS

    3.9

    ItzCash

    Private

    Itz Cash Card Ltd.

    Yes

    Android, iOS

    4.4

    Freecharge

    Private

    Snapdeal

    No

    Android, iOS, Windows Phone

    4.3

    Axis Bank Lime

    Banking Industry

    Axis Bank

    No

    Android, iOS, Windows Phone

    3.6

    Airtel Money

    Telecom Industry

    Airtel

    Yes

    Android, iOS

    4.2

    ICICI Pockets

    Banking Industry

    ICICI Bank

    Yes

    Android, iOS

    4.1

    Jio Money

    Telecom Industry

    Reliance

    No

    Android, iOS, Windows Phone

    4.2

    mRupee

    Telecom Industry 

    Tata Teleservices Limited

    Yes

    Android, iOS, Windows Phone

    3.7

    SBI Buddy

    Banking Industry

    State Bank of India

    Yes

    Android, iOS

    3.9

    Vodafone M-Pesa 

    Telecom Industry

    Vodafone

    Yes

    Android, iOS, Windows Phone

    4.2

    HDFC PayZapp 

    Banking Industry

    HDFC Bank

    Yes 

    Android, iOS

    4.0

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