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Current affairs is an important component of several competitive exams such as the UPSC Civil Services Examination, SSC CGL, Bank PO & PSU entrance tests, etc. Therefore, understanding the terms/concepts/events that make news is critical for aspirants. We at PaGaLGuY bring you series of articles explaining some of these important concepts/events. Read on to know about mobile wallets and their growth.
Though a recent development, mobile wallet services
are fast overriding long-standing payment facilities like credit and debit
cards. There are over 10 companies successfully operating in this space in India. Mobile
wallets are considered to be game-changers as they have diminished the need for
cash payments. For instance- Paytm is the biggest contender in India with
already 25 million people using its mobile wallet service.
What is a mobile
wallet?
A mobile wallet is the digital twin of your cash wallet/purse.
Put simply, your mobile phone becomes your mode of payment. A mobile wallet service
provider enables a person to recharge his phone, pay utility bills like
electricity/gas, book airline or movie tickets or even settle your shopping
bill. Consumers can load money in the wallets and make payments to those outlets
that have a tie-up with the service provider. The digitally stored cash cannot be
withdrawn by consumers.
Pros and Cons
· 1. Mobile wallets enable cashless payments and as service
providers are establishing tie-ups with almost every utility providers, reach
is wider. From buying LEDs to seats in luxury buses, everything becomes easy through
your mobile.
· 2. People who are not even bank account holders can
use mobile wallets for transactions. They are a boon for people are apprehensive
about carrying out net banking operations from their phones fearing electronic
fraud.
· 3. For companies, a mobile wallet has the ability
to increase revenues and bring down operating costs.
· 4. It is relatively safe and fast.
· 5. On the flipside, in the name of increasing
sales, businesses can hound you with constant notifications about sales and discounts.
· 6. It restricts usage as you can make payments to only
those retail outlets that the service provider has a tie-up with.
· 7. You cannot make payments if your phone battery gets
exhausted unlike a physical wallet or a debit/credit card that are free of this.
Mobile wallet scene
in India
Majorly dominated by telecom companies and payment service
providers like: Tata Teleservices Ltd’s mRupee, Vodafone’s m-pesa, Bharti
Airtel’s Airtel Money and Paytm, MobiKwik, Oxigen, Citrus, etc. The RBI limits
the amount of money that can be stored in the wallet to Rs.50000.
Paytm got the wallet service licence from the RBI in
2014 and and aims to touch
the 100 million user mark by 2016. Recently, Paytm introduced Immediate Payment
Service (IMPS) on its platform through which users can use their wallets to
transfer money into any bank account. The IMPS service offers interbank
electronic fund transfer service through mobile phones.
While Mobikwik has 8 million wallets, Oxigen claims to be carrying
out 50 million transactions every month.
As the number of people with mobile phones are more than
those with a bank account, mobile wallets have great scope among people in rural
areas and the country’s unbanked population.
Why mobile wallets
spell doom for Indian banks?
With its increasing popularity, a mobile wallet can be
pegged as the future of cash. However, growth of this space is an impediment for
banks in India. Rising competition is the reason. Banks are not only battling
with increasing bad loans (or non-performing assets) but also have to tackle
the challenge of generating more business. While banks earlier considered that
business with retail consumers is unprofitable, they are now left with no
choice but to run after the common man.
Thus, many banks have now joined the mobile wallet fray. On
July 7, ICICI Bank announced relaunched of a ‘revolutionary’ mobile banking app,
which provides 100 kinds of services, the highest by any bank in India.
State Bank of India has an app in the name of State Bank Rewardz,
Axis Bank has Pingpay and HDFC has its PayZapp.
The aim is to chase customers, especially mobile wallet
users without a bank account.
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