You all might have seen this popular ad: a passenger does not have the exact change. So, he hands over a Rs 500 note to the taxi driver. He instead tells him to pay through his mobile and he happily obliges. This new instant payment system is gaining favour nowadays. All you need is an android phone! Well, this is e-wallet payment for you.
Here is all you need to know about this transaction system:
So what’s the system all about?
It works more or less like a credit or debit card. You swipe the card to make your payment. There is no physical transaction of cash, only an electronic one.
The e-wallet system is like a prepaid mobile recharge voucher. You have the liberty to recharge your mobile balance with as much money as you need. You can then chat, message or browse as long as your balance suffices.
Under the e-wallet system, you can store your money in your online account and spend them whenever you need. All you need to have is a credit or debit card with which you can transfer your funds into the e-wallet account.
Download an e-wallet service providing app, register yourself and shop anything from grocery goods to electronic items. All e-wallet companies also offer flat discount only various kinds of online purchases. An irresistible offer for any customer! In case you fall short of funds, you can pay the rest of the amount either through your credit or debit card or even cash.
Spreading to masses
It has caught the imagination of the common man. And why not! There is negligible risk of debt accumulation. The whole system works on the principle of a pre-paid account. You are able to enjoy various services only as long as you have funds in your e-wallet. This is unlike a credit card which often allows you to buy goods on credit, but also increases your debt burden.
Another reason for its popularity is the relative safety that it provides. To utilize a credit card, you need to provide details like the card expiry date and the 11 digit card number. Online wallets can be accessed just by entering a single password.
Banks join the bandwagon
E-wallets were originally introduced by online payment companies like PayTM and Oxigen. The banks, however, have also jumped the bandwagon now. ICICI Bank launched its own e-wallet service ‘Pockets’ in February this year. Axis bank introduced PingPay while HDFC bank came up with its own e-wallet service PayZapp.
M-wallet – a potential gamechanger
Look at these facts: A recent Reserve Bank of India data reveals that the total worth of all m-wallet transactions amounted to about Rs 8,180 crore in 2014-15. The total number of transactions too rose from 106 million to 255 million in the span of just one year. E-wallets are becoming m-wallets or mobile wallets since all transactions can be done with the help of e-wallet android apps. This has contributed in the rise of e-wallet transaction.
Currently the banking system is burdened by the non-repayment of loans. This has meant regular losses for public as well as private banks. The E-wallet or more precisely m-wallet boom provides an opportunity for banks to earn some profits.
What experts say
However, financial experts are divided over banks joining this new phenomenon. Some say that banks starting m-wallet service is an irony in itself. They say that e-wallet companies like PayTM store money for your transactions while banks also do the same by holding your money in their accounts.
There is another section of experts which believes that banks need to capitalize on this new form of transaction before it is too late. They feel that if banks continue neglecting this upcoming mode of transaction, then online players like PayTM and Mobikwik might force traditional instruments like credit and debit card to phase out.
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