Digital Wallets in India

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Digital Wallet

Digital wallets or e-wallets have changed the way consumers pay for various goods and services. Digital payments are slowly becoming a way of life and it has the potential to be the most sought-after type of payment mechanism in future, according to many economists and scholars.

So what is a digital wallet? A digital wallet is nothing but an electronic version of a traditional or physical wallet, through which one can make payments. When a digital wallet is used on a smartphone, it is referred to as a mobile wallet.

With the focus in India shifting towards a cashless economy and a digital future, the government has also been taking various measures to promote and encourage the use of such technology. This has been made possible through the various government-backed digital payment apps such as BHIM app or the Unified Payments Interface (UPI) payments app.

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How Does a Digital Wallet Work?

A digital wallet saves card details of the user and lets him/her make purchases online. For example, a MasterPass digital wallet asks customers to first register for the service by entering card details. The information then has to be verified through an OPT authentication process, post which, registration will be complete. After this process is complete, one can choose the ‘Buy with MasterPass’ option as a payment mode on e-commerce websites that have this option. The payment can be made by entering the MasterPass card ID and password and the transaction will be authenticated through a 3D-secure pin or OTP.

Payments for Goods and Services Purchased Online

When payment is made through a digital wallet for goods and services, the time taken will be lesser when compared to credit or debit card payments. Digital wallets can be used for paying utility bills, DTH plans, and mobile bills or to recharge a prepaid connection. Purchases can also be made on e-commerce sites through digital wallets. Most e-commerce sites have tie-ups with many of the digital wallet companies and hence allow customers to make payments through the same.

How to Pay Using a Digital Wallet on an E-commerce Site?

  • Log into the e-commerce site. Add the respective product to a cart
  • Under payment mode, select ‘Wallet’
  • Choose the respective wallet
  • Make payment

Application/Scope of Digital Wallets

  • Digital wallets can be used to make online purchases from e-commerce websites
  • To pay various utility bills such as electricity, prepaid recharge, booking movie tickets, telephone bills, etc
  • Can be used to order food online
  • Can be used for travel bookings
  • Online fund transfer can be made through a digital wallet
  • Many financial products such as mutual funds and insurance can be purchased

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Advantages for E-commerce Sites

  • There are no geographical limitations when it comes to e-commerce sites. Once can purchase goods from any location
  • Saves the consumer time and energy
  • Helps the buyer search for a product online and compare prices without having to physically go to different shops
  • Easy to compare prices online
  • Rewards, cash rewards, coupons and attractive deals offered by e-commerce sites

FAQs of Digital Wallet

  1. Why should I use a digital wallet?

    2. A digital wallet is a safe, secure and fast mode of digital payment for goods and services. It eliminates the need to carry cash.

  2. Are there any charges or transaction fee for digital wallets?

    3. Most digital wallets can be used free of cost. However, some service providers may charge a nominal service or transaction fee.

  3. Are there cash back and rewards for using digital wallets?

    4. Yes.

  4. Where can I use my digital wallet?

    5. Digital wallets can be used wherever cashless/digital/contactless payments are being accepted.

  5. Is it safe to use digital wallets?

    6. There are many security features available in digital wallets. Physical card details are not stored in the digital wallet and no transaction can be authorized without a password, pin or OTP.

  6. How do I know if the particular e-commerce site accepts digital wallets?

    7. Check for the name of the wallet in the payments section. It usually appears under the payment mode option, under wallet.

  7. Are there any transaction limits on digital wallets?

    8. Most digital wallet service providers set a certain monthly transaction limit.

  8. Is it possible to track purchases on a digital wallet?

    9. Yes.

  9. Will merchants be able to access my card details or card number?

    10. No. All transactions will be carried out only through a digital account number.

  10. What if the customer changes his bank account or gets a new card?

    11. The new details can be updated on the digital wallet without any hassle.

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News About Digital Wallets

  • FreeCharge Now Joins Hands with UPI

    Another mobile-based payment application platform FreeCharge has collaborated with the Unified Payment Interface (UPI).

    With this, all users of the app can create a UPI ID and make use of the services. This service is available on all Android platforms as on now. Through UPI, payments can be made using just a Virtual Payment Address (VPA) and there is no need to provide other details such as bank account number or even the IFSC code.

    FreeCharge is owned by Axis Bank. The other UPI-enabled apps in the market include Paytm, Google Tez, Phone Pe, among other such mobile-based apps.

    UPI has been seeing an unprecedented surge in the last couple of months. The service is being promoted by the National Payments Corporation of India (NPCI). A majority of UPI-based transactions account for fund transfers, which can be done on a 24/7 basis on 365 days in a year, including bank holidays. Even global companies such as Google are taking to UPI and this is how Google Tez came into being. Off late, Bharat QR has also joined hands with UPI. Not just this, the government has mandated that all UPI-based apps provide the Bharat QR facility without fail to users

    3 April 2018

  • Using an e-Wallet? KYC Must From March 1 Onwards

    Those who are using any type of digital wallet/mobile wallet or digital payment app or other such Prepaid Payment Instruments (PPI) will have to mandatorily link their KYC details. Those who have not initiated and completed this process by February 28, will not be able to use their respective e-wallets from March 1 onwards.

    The Reserve Bank of India (RBI) has not and may not extend the deadline in this regard. All those users who do not complete the KYC process within the deadline will be unable to use any PPI services across the country. This means that, funds cannot be remitted into their respective e-wallet accounts. Apart from this, customers who fail to comply with this rule cannot send money to bank accounts from the respective wallet.

    On the other hand, the remaining balance can be utilized till the KYC process is completed.

    RBI representatives state that the reason behind such a move is to ensure that there is some transparency as far as digital transactions through PPIs are concerned. Also, there is a need to put in place a safe and secure mechanism for such transactions. Also, KYC will be required to bring in a system of ‘interoperability’. Users who do not want to link their KYC details have an option to put the money from the digital wallet back to the bank account and close the respective wallet account.

    14 March 2018

  • Securing Digital Mobile Wallet Safety in 4 Ways

    With the government encouraging cashless transactions, more and more people are opting for different modes of digital payment processes like digital mobile wallets, Net Banking, Credit and Debit Card payments with wallet transactions being the easiest.

    The sale of smartphones is increasing every day as people can choose from a myriad range of affordable smartphones. As a result, the number of mobile wallet subscribers is growing as the transaction process is faster and more user-friendly. However, it is necessary to safeguard the process by keeping in mind these 4 points:

    • No one should share information related to OTPs used for transactions and other wallet details even when talking to the Mobile Wallet companies.

    • It is recommended to either log out each time after using the wallet or lock the phone with a strong password. This will help prevent the misuse of wallet money in case the phone is misplaced. App Lock is also a great alternative to ensure safety.

    • While the transaction is being processed, the users must refrain from refreshing the page or go back in case poor connectivity or other network issue is delaying the loading of the page. It is best to cancel the wallet transaction process only after receiving a transaction failure or unsolicited message.

    21 December 2017

  • Digital Payments: A Promising Future

    The future for the digital payments industry looks promising in the country and the rate of adoption is very high, according to a recent study conducted by a global investment banking firm.

    As part of the study as many as 1,522 medium scale and medium enterprises were surveyed to understand the trends relating to digital payments and also look into the adoption rate. The study revealed that the adoption rate stands at a high 77%. It was also found that Goods and Service Tax (GST) will solve a lot of problems.

    16 November 2017

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