New to M-wallet? Here’s all you need to know

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New Delhi | Updated: December 9, 2016 6:01:06 PM

Mobile wallet is relatively a new concept in India and has gained popularity in a very short span of time, particularly after the Modi government's demonetization drive.

The companies offering M-wallet services mainly target young tech-savvy people. (Reuters)The companies offering M-wallet services mainly target young tech-savvy people. (Reuters)

Mobile wallet is relatively a new concept in India and has gained popularity in a very short span of time, particularly after the Modi government’s demonetization drive. The companies offering M-wallet services mainly target young tech-savvy people.

According to a recent Assocham-RNCOS joint study, m-wallets have proven to be extremely useful for transferring money from urban areas to rural areas, even without using a bank account. Mobile wallet users enjoy greater flexibility in making secure payments. Furthermore, those who do not have a credit card or a debit card can go to their nearest wallet recharge kiosk, and get their wallets loaded against cash.

WHAT IS M-WALLET?

Mobile wallet is a virtual wallet service provided by certain service providers, wherein people can load a certain amount of money that can be spent at online and offline merchants listed with the mobile wallet service provider. This digital payment service works as a cashless payment service, wherein people do not have to pay cash or swipe their debit or credit card at offline merchants.

One of the major driving factors of the Indian M-wallet market is the upward trend in the usage of mobile internet. This is primarily because the telecom operators have reduced their internet charges due to extensive competition and advancement of new technologies. The 3G user base has been growing significantly YOY since 2013. Therefore, mobile internet has become an affordable service to many people in India as compared to early 2000’s.

TYPES OF M-WALLET

There are basically four types of mobile wallets in India:

1. Open Wallet: It is the one that allows a user to buy goods and services, withdraw cash at ATMs or banks, and transfer funds. These services can only be jointly launched with a bank. Additionally, it allows its users to send money to any mobile number bank account.

Example: M-Pesa by Vodafone and ICICI

Maximum amount that can be stored by card holder: Rs 1,00,000

2. Semi-open Wallet: It is the one that allows its users to transact with merchants that have a contract with the semi wallet company. A user cannot withdraw cash or get it back; he will have to spend the amount he had loaded.

Example: Airtel Money

Maximum amount that can be stored by card holder: Rs 1,00,000

3. Closed Wallet: It is quite popular with e-commerce companies. Here, a certain amount of money is locked with the merchant in case of a cancellation or return of the order, or gift cards.

Example: Lifestyle gift card, Metro Card, Flipkart e-wallet

Maximum amount that can be stored by card holder: Rs 10,000

4. Semi-Closed Wallet: It does not permit cash withdrawal or redemption, but allows users to buy goods and services at the listed merchants.

Example: Oxigen, Paytm, Mobikwik, etc

Maximum amount that can be stored by card holder: Rs 10,000 (without KYC), Rs 50,000 (with KYC)

LOADING CHARGES

Some of the M-wallet companies charge their users for loading money in their wallets. These charges vary between 1% and 1.5%, depending upon the source of loading money and the total amount of money to be loaded. For example: “Oxigen charges 1% of the total amount to be loaded, if the amount is loaded using a credit card, debit card and Immediate Payment Service (IMPS); and its distributors or retailers charge between Rs 8-245 depending upon the amount to be loaded. However, companies like Paytm, Mobikwik and ITZ cash do not charge for loading money,” the study says.

Mobile wallet, in fact, allows its users to save their money in their M-wallet account like they save in the bank account, and at the time of transaction they can simply log into their M-wallet account and pay the desired amount. They do not have to enter their card details every time they make a transaction, rather they only have to enter their M-wallet ID and password. This service has made the online and offline transactions easy and hassle-free in addition to saving time.

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