Hello Mi Fans,
India moved a step closer towards becoming a cashless economy with the introduction of Digital Payment methods. Numerous types of technology have been introduced for digital payment instead of currency payment. And out of these Mobile Wallet is the basic and most used digital payment technology. A combination of the desire to reduce card fraud and the popularity of smartphones has led to the emergence of mobile wallet solutions for point-of-sale (POS) payments. However, the payments industry remains in the midst of the “mobile wallet wars,” as market entrants battle it out to see which technology approach and provider or providers will carry the day.
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Mobile wallet is consumer-to-business payment technology that’s been around for several years but has become more widely known since the high usage of mobile phones and mobile wallet apps that the new phones support. A technology called Near-Field Communication (NFC) technology that enables consumers to wave or tap their phones at a retail POS terminal to pay with a credit card that’s been loaded onto the device. Mobile wallet is seen as a way to reduce credit card fraud, since in most models credit card numbers are protected through tokenization. In addition, by 2020, 80 percent of the world’s adult population is projected to have smartphones, and few people, particularly the younger generation, leave home without their phones. Thus, increasingly, paying with a smartphone will offer most people a fast, convenient payment alternative: With a mobile wallet, you can literally leave your leather wallet or purse at home but still make purchases as long as you have your phone. The challenge with mobile wallet is that “there are so many players offering so many different solutions — and so many questions about compatibility and security.”
Mobile Wallets in India: 5 Things You Should Know
What is a Mobile Wallet
Simply put, it's a mobile-based virtual wallet, where you preload a certain amount in your account created with the mobile wallet service provider, and spend it at online and offline merchants listed with the mobile wallet service provider. For example, if you go to a coffee shop A, which is listed with XYZ mobile wallet, you can pay for your coffee through the phone. Depending on the service provider, you can also pay through app, text message, social media account or website.
Anything and everything! Right from utility payments to e-tailing and offline payments, you can perform most of your daily transactions.
Types of wallets
There are four types of mobile wallets in India - open, semi-open, semi-closed and closed. Open wallets are the ones that allow you to buy good and services, withdraw cash at ATMs or banks and transfer funds. These services can only be jointly launched with a bank. M-Pesa by Vodafone and ICICI is one such example. Apart from the usual merchant payments, it also allows you to send money to any mobile numberbank account. Airtel Money is a semi-open wallet, which allows you to transact with merchants that have a contract with Airtel. You can't withdraw cash or get it back. You'll have to spend what you load. Then, there are closed accounts, which are quite popular with e-commerce companies, where a certain amount of money is locked with the merchant in case of a cancellation or return of the order, or gift cards. Lastly, there are semi-closed wallets like PayTM, which do not permit cash withdrawal or redemption, but allow you to buy goods and services at listed merchants and perform financial services at listed locations.
A mobile wallet primarily enables an individual to pay as well as receive payment using a mobile device. Typically, a mobile wallet is delivered through several payment processing models. This includes, but not limited to:
Why Mobile Wallets
Regardless of the model used, a mobile wallet service is generally delivered by and in collaboration with mobile service providers and banks (or other financial institutions).
The biggest advantages that a Mobile Wallet offers today:
Scope Of Mobile Wallets
Indians are becoming savvy at digital payment, and most companies are not wasting any time in setting up their wallets. 2016’s demonetisation may have kicked up the so-called Cashless India procession, but if numbers have ever given us an indication of where the future is headed, then the narrative has been set up rather nicely. Experts are quietly optimistic of payment companies making the best of India’s growing mobile internet population. And the fact that people won’t be allowed to do cash transaction to a greater extent should work in favour of digital payment. India has predominantly been a cash-obsessed nation, and when 99 percent of the economy was deprived of it, they had no option but to go digital.
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According to a recent report on Digital Payment in India 2020 by Google, the total payment via digital instruments is expected to touch $500 billion by 2020. Cash payment constitutes 97 percent of the total payment. Government has set a target of Rs 2,500 crore on digital transactions in FY 2018 (Rs 625 crore in the first quarter of which merely 37 percent was met). Digital payments have a huge potential. India has the largest internet user base in the world with 300 million users. Out of which, nearly 50 percent of them are mobile-only internet users.
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There Are Risks
Consumers should realize, though, that there are some potential drawbacks to using a mobile wallet. One could be increased fees. Because merchants pay fees to process cashless transactions, they can then pass on that cost of doing business to consumers in the form of slightly higher prices—just as they do with regular credit cards. When consumers pay by mobile wallet, they also risk sacrificing some of their privacy. Retailers and banks can collect data based on the transactions we make, so they know the products we like to buy and the stores that we frequent. They can then use that information to target advertising. But a bigger privacy concern is the unanticipated use of your data, because privacy policies tend to give broad permission for uses that may not even exist yet, says Claire Gartland, consumer protection counsel at the Electronic Privacy Information Center. The biggest risk, though, could be a practical one. If your phone battery runs out of power, you'll have to scramble to find cash or, possibly, an old-fashioned credit card.
Mobile wallets may offer more convenience and security than a traditional wallet. And they’re widely accepted at retailers around the country. Which mobile wallet you choose will depend largely on the kind of device you want to use it with. Don’t sweat the choice too much: Many of the popular options are similar in terms of performance and the level of security they offer, so you can choose the wallet that pairs best with your smartphone and use it with confidence. So currency payments are gonna be history soon. So will digital payments like Mobile Wallet takes over almost 100% in near future? Do REPLY down your opinions. Let's have a debate session on comment section below :)
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