VIRTUAL WALLETSBY RITIK BATRA

BBA(B&I) 5TH SEM, 1ST SHIFT

04014901813

INTRODUCTION

• Lately it seems like most companies are falling over themselves to find new ways for you to make payments. Cash went out of fashion ages ago and instead of having to rely on a credit or debit card companies now want you to pay for just about everything using a virtual wallet. After facing regulatory troubles Uber India has now tied up with Paytm to handle its cashless payments while others like Ola have chosen to launch wallet systems of their own. For most of us, those terms are pretty meaningless. In case you're wondering what a virtual wallet is, or why you'd want to use one, I've got you covered.

CLEVER USE OF PSYCHOLOGY

• Ever thought why paying 100 rupees is far easier than paying 110? It’s this little thing inside your head which makes you think that 10 rupees is far too much but 100 rupees is just fine.

• Similarly, it’s the same thing inside your head which negates the fear of losing money when you’re not actually losing sums of money from your pocket, but instead, paying in such a way where loss of money doesn’t affect you as much

WHAT’S ‘VIRTUAL’ ABOUT THIS WALLET?

• The basic concept is really simple - a virtual wallet just serves as a place to hold some of your money online. You make payments using the money stored in your wallet instead of using a credit card, debit card or net banking, which means your bank account doesn't need to be accessed. Of course, adding money to the wallet still requires you to use one of those methods.

• Once you've stored the money in a wallet, you can use it to make payments - to the wallet provider or to third party services depending on the type of wallet you've signed up for. Most services also come with a mobile app so you can easily check your balance and make purchases. Some wallet services such as Paytm are built around their own stores where you can buy goods, and some let you buy recharges for your phone or pay your DTH bill. You can also use these wallets to make payments at other websites - BookMyShow and JustEat.in both support Paytm, for example.

WHY DO/MUST WE USE IT?

• The biggest reason is probably ease of use - something that is particularly true for mobile users. Unless the site you want to make a payment on lets you save your credit or debit card details, you're going to have to spend a fair bit of time typing them in every time you need to make a payment(Enter: virtual wallets!).

EXAMPLE OF USES OF A VIRTUAL WALLETThis is a screenshot taken from bookmyshow.com

It shows you various other ways to make payment other than your usual Debit/Credit cards or Net banking systems.

This, my friends, is the new world including virtual wallets

LEVEL OF SECURITY

• Add to that the fact that the RBI has decided that all transactions need to be secured by a second verification code or one-time-password, and the process of paying online using your credit or debit card becomes extremely cumbersome.

• Paying with a wallet can also be safer - the wallet itself might not be required to have the same level of security as your credit card but since your bank account isn't touched the amount of harm that's possible if the seller is compromised, is limited.

• That's because mobile wallets in India are limited to a maximum account value of Rs. 10,000 and are typically expected to be used for small payments. Therefore wallets are not subject to the same security restrictions. This means that you can use one of these wallet services to quickly and conveniently make payments from your mobile phone after loading it with cash when you have free time - you could even do this from your computer, where entering all the bank details is easier.

PROMOTION

• Since the concept of a mobile wallet is still pretty new in India, almost all the companies that offer them are also offering deals, discounts and free top-ups - for example, Ola launched its wallet with an offer to double the money you stored in it, and Paytm has regular discounts on products, offered as credit added to your wallet that can be used to shop some more.

• While the urban sector of the society wouldn’t care too much about these offers, the youth and the middle sector of the society, however, shall be biting their lips to exploit these offers and promotions to the extent of their ability to, you guessed it, exploit

Types of Virtual Wallets

Closed Semi-Closed

CLOSED

• A closed wallet is one where the flow of money is one-directional. You can put your money into the wallet, but can't later withdraw it. A closed wallet can't be used for making payments to third parties; it is in effect a prepaid card for these different services. Paying with a closed wallet is usually automatic - like a pre-paid card, your balance gets deducted as you use the service.

• So for example, Ola has a closed wallet for its taxis, and the money that you put into the service can only be used to pay for those taxis. It will never expire, though, and since Ola controls the wallet, it can give you loyalty rewards and discounts with ease.

• "Payment is an important cog in the wheel of any experience," says Anand Subramanian, Director - Marketing Communications, Ola. "A wallet helps make the experience seamless for both customers and drivers saving time and effort involved in the transaction."

SEMI-CLOSED

• A semi-closed wallet lets you take money out of it and put it back into your bank account. This means that you have full control over your money - and it can be used to pay for a wide range of services. Some well-known ones are Paytm, Oxigen and Mobikwik.

• These are much more flexible than fully closed wallets, but also come under far more oversight from the RBI. The concept is quickly gaining in popularity though. For example, Paytm launched in January 2014, and is now being used for over 8 lakh orders per day, says Paytm Chairman and Managing Director, Vijay Shekhar Sharma.

• According to Sharma, the mobile app has been downloaded by 12 million people (of which 90 percent are Android users); and Paytm has a total of 22 million members now. "We are leaving credit cards and debit cards far behind," says Sharma.

THE DIFFERENCE, APART FROM THE OBVIOUS

• The big difference, when compared to a closed wallet, is that these services also let you withdraw your money. If you've put Rs. 5,000 in Ola's wallet, you're going to have to take Rs. 5,000 worth of taxi rides, because you aren't getting that money back.

• With a semi-closed wallet, there's always the option of transferring the money back to your bank account. What's missing in all this is a way to interconnect wallets - these companies are all competing with each other and do not share a common infrastructure. If mobile wallets become interoperable, so that for example a Paytm user could send money to a MobiKwik user, both services would become a lot more useful.

VIRTUAL WALLETS: THE INDIAN WAY

• First there was barter system in which people used to pay for goods with kinds, then came coins and soon the cash and eventually plastic cards (credit and debit cards). But now there is a question mark on the necessity of plastic cards too with the rise of 'virtual wallets'.

• Virtual wallets, as its name suggests, is not a physical entity like regular wallets. It is an online phenomena like a mobile application where you can store your credit/debit card information or recharge its account like you do for your mobile phone account. The benefit of virtual wallets is that you don't have to carry around your plastic cards with you.

• In an emerging country like India, there are several virtual wallet service providers and they are making it very hard to ignore their services these days. From cash backs, recharge offers, to sheer convenience; they are a real value proposition.

TOP 5, OR WELL, 5 OF THE BEST

• The following are the 5 of the most popular and obviously, the most used virtual wallets in the country:

PAYTM

• It recently claimed to have over 100 million users. PayTM allows users to not only pay for mobile phone recharges, post-paid bills, landline bills, utilities, DTH services, bus tickets, Uber cabs, but also for online shopping on numerous websites including Paytm, Make My Trip, Book My Show, and even transfer money to your friends, family, etc.

• In a press release issued earlier this month, it said that the Paytm wallet is being accepted by over 80,000 sellers. You can recharge its wallet (load money) using debit card, credit card, net banking and even through case via its cash deposit points (there are over 20,000 such centres in India).

• Paytm wallet has a basic monthly limit set by RBI. This means you cannot keep or spend more than Rs 10,000 in your wallet in a month. To upgrade your limit to Rs. 1 lakh, you have to verify your account using the KYC process.

MOBIKWIK

• MobiKwik, started in 2009, claims to have 17 million users. As per MobiKwik, over 50,000 retailers (both offline and online) accepts payment from MobiKwik including Shopclues, eBay, Domino's Pizza, Jabong, Book My Show, Infibeam, and many others. MobiKwik, like other wallets allows you to transfer funds to others and pay all your bills, DTHs, recharges, etc.

OXIGEN

• Formed in 2004, Oxigen wallet is the oldest player in the market today. Oxigen allows you to transfer money through IMPS, and claims to have banking level of security. They claim to do over 35 million transactions in a month, and have the regular glut of options in terms of recharges, bill payments, and money transfer, even allowing for transfers via social media.

AIRTEL MONEY

• Airtel Money is Airtel's very own wallet. It offers functionality similar to all other wallets, except that this is very strongly linked to your mobile number. Use it to recharge your phone, pay your bill, your Airtel DTH, utility bills, book movie tickets, train tickets, and shop online too. The app offers a numbers of features such as tap to request payment, shake for offers, and so on.

VODAFONE MPESA

• Like Airtel, Vodafone has its own wallet service called mPesa. Similar to the other services, mPesa allows you to pay your Vodafone bills, recharge your phone, pay your DTH, and even your utility bills. mPesa is linked to your Vodafone number and also lets you send money to others.

FROM THE LAND OF THE LOST

• Itz Cash was one of the first of its kind to be introduced into the country. The internet’s might was not as strong as it is right now. Naturally, the concept of ITZ cash as a virtual wallet died. Itz cash deserves more recognition than it gets, and it may have, had the timing been right. Oh, well.

THANK YOU

Any questions?

Sources: ndtv.com

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