Gone are the days when the core purpose of a wallet was to hold your cash and cards apart from stuff like a license or a random bill paper. With the advent of digital wallets, the physical wallet is now boiling down to being mainly a fashion accessory.
In case you are still wondering what a mobile wallet exactly is, a mobile wallet is a digital wallet on your mobile phone. It simulates the regular wallet replacing the cash with digital money and physical cards with the card details. A Payment gateway is integrated with a mobile wallet to help a user load and send money to and from their wallet with the help of their credit or debit card or your digital bank account. To start using a digital wallet, you just have to register your account details in your e-wallet application which are securely stored and used for all transactions. So the next time you are at the grocery store or at the mall, instead of using your physical card to make purchases, you can simply scan a QR code at the counter with your phone camera, enter the amount and voila – your digital payment is done!
The Evolution of Mobile Wallets
Mobile wallets entered the market with basic offerings such as mobile recharge and bill payments and as a payment option on a few e-commerce portals. Today, mobile wallet solutions have evolved and can be used for various transactions such as to recharge mobile phone, pay utility bills, book a hotel, secure loans, buy movie tickets, travel on the metro or by a flight, and even buy & sell gold. Cheaper handsets and increasingly economical data plans have fuelled the growth of smartphone users in India leading to further usage of mobile wallets. To top it, digital wallets provide a simplified transaction experience while offering a host of other value-added services to the users. It is estimated that in the next 5 years, the Indian mobile wallet market is set to grow by 150% with transactions recording at some $4.4 billion.
Why use Mobile Payments?
Mobile payments can be used in a peer-to-peer transfer or for paying at a brick-and-mortar business. Mobile transfers are quick and allow you to forgo the hassle of dealing in cash and checks. The other reasons can be cited such as:
- Saves Time: Contactless Mobile payments are by far the fastest way to pay, consuming only a few seconds. To compare, they’re slightly faster than swipe payments and much more so than the sluggish EMV chip payments. For businesses such as retailers that have checkout lines, such contactless payments enable the queue to move faster resulting in shorter pay time.
- Provides Convenience: Urban Indians prefer carrying lesser cash, and with the ubiquity of mobile phones instant payments happen to be the most viable medium.
- Secure: Mobile payments have multiple layers of dynamic encryption, making them an extremely secure way to pay. They’re far more secure than magstripe payments and just as secure as EMV chip card payments. In fact, if you’re using a mobile payments app with fingerprint ID, it’s arguably more secure than an EMV chip card payment.
Types of Mobile Wallets
Depending on the services offered, wallets are of different types:
- Closed Wallet: Companies such as Bookmyshow, Ola and Amazon have frequent online purchases. As such, it is convenient and more intuitive for the users to pay if the payment wallet is present on the application itself. Such wallets are called Closed Wallets. The money stored in these wallets can only be used to transact with the companies who issue them.
- Semi-Closed Wallet: Wallets like Paytm Wallet, Freecharge Wallet, Citrus, Oxygen, etc. are labelled as semi-closed wallets. These wallets, which require an RBI approval, can be used for both online and offline transactions which include buying goods and services, financial services, payment of fees, premiums, etc.
- Open Wallet: These wallets can be used to perform all the transactions of semi-closed wallets plus withdraw cash at ATMs or banks and transfer funds. M-Pesa by Vodafone and ICICI bank, Pay Zapp by HDFC Bank, etc. are few open wallets in India.
Mindgate Mobile Payments Solutions – The Way Forward
Mobile payments have revolutionized the way businesses think about payments processing. We are moving toward a more secure, authenticated and faster way to process payment. Mindgate mobile wallet solutions help banks fulfil this need with the ability to engage even the unbanked customers to leverage the facility for financial transactions. The Mindgate prepaid solutions platform is built on open source technology framework and is optimized for high scale and volume. The platform enables to open up their service offerings for all participants across channels with incredibly quick TAT!