Mobile wallets are great for small-value transactions
India has more mobile subscribers than bank account-holders. So, using the mobile as a platform for new age services makes great sense. While mobile apps from banks have become popular, there is a large number of people who think using mobile for financial transactions is risky.
Now, let us see how a mobile wallet (another form of mobile payments) works. The mobile wallet is a virtual equivalent of your physical wallet. It stores information about your bank account, credit or debit card and personal identifaction details, like permanent account number (PAN) or driving licence number. This requires very strong security, for protecting the stored as well as transaction data. Due to the absense of standards and norms, the mobile wallet is creating some quirky moments. For example, State-run Bharat Sanchar Nigam Ltd (BSNL) tied up with State Bank of India (SBI) to offer MobiCash, a mobile wallet that promises users to withdraw money from SBI ATMs. However, BSNL officials are clueless about how this will happen, especially for withdrawing money without an ATM card.
At present, Paytm, MobiKwik, Oxigen and Citrus are the leading mobile wallet service-providers in India, licensed by the Reserve Bank of India (RBI). As per the current norms, a user can load money on her mobile wallet and use it for making payments to merchants which have a tie-up with that wallet service-provider. For example, a user of Paytm can make payment only to a merchant which has a tie-up with Paytm and, thus, can accept mobile money. But things are changing rapidly; soon users may be allowed to withdraw money through mobile wallet. In addition, the user cannot deposit more than Rs10,000 on her mobile wallet without fulfilling RBI’s know your customer (KYC) norms.
What is the advantage of using a mobile wallet over conventional or online payment systems? There are two major factors that go in favour of using mobile wallets. First, your personal details, especially financial information like bank account number, are not exposed. And, second, it limits your exposure in terms of value transactions, because you can upload (in most cases) just Rs10,000 without the KYC checks. So even if there is some issue with the mobile wallet (not likely, though), you may end up losing a maximum Rs10,000 as against losing every single penny in your bank account, in case your account is compromised.
How can you use a mobile wallet? Well, first identify the service that you would be using for making small payments. Then, check which is the common mobile wallet available for most of the services and use it. But make sure, you upload the amount sufficient to pay for services that you would be using.
The advantage of using mobile wallet is that it requires minimum effort from the user to make a payment. However, with RBI planning to make online payments through one-step authentication, mobile wallets may lose the advantage. But, as I said earlier, for small value transactions, mobile wallets are still the best bet, provided the service-providers make sure to bring every merchant on their platform.
While there are about a dozen mobile wallet service-providers in India, each has tie-ups with different kinds of merchants. This means, for each type of service, you will have to use different mobile wallet; this explains why, despite a rise in number of mobile wallet users, there is no huge jump in terms of transactions and revenues. Hopefully, soon, big players like Google Wallet or Apple Pay, which are now available in the US, will be allowed to make an entry in India and the rest, as they say, will fall in place.