When digital wallets were launched for web public very few people used them. The question was why to use them other than the security aspect. People talked why should I use it? Where I can use it? Who will accept it?
Now most of these questions have the answers. Initially it was used for Recharge, Online Purchase and Cashbacks. Recharge in those days could have been done by net banking, credit/debit cards, so web users (wusers) thought that there is no need of wallet. Then cashbacks came into picture. So, on paying through wallet wusers started to get some cashback. It was on recharges, online shopping. Wusers were excited to get good amount of promotional cashbacks and they started using wallets. After this, wallets were used to pay across webpanies (web companies) for shopping on different sites. These various webpanies incorporated wallet as payment method along with cards, net banking, COD and vouchers etc. And after this, digital wallets were introduced to offline world. Paying at Petrol Pumps, Shops etc.
A demand was created for wusers where they were getting good cashback. People always want to have less carrying cash in pockets. Many of them don’t have cards (debit/credit) but do have a smartphone and internet (for whatsapp). And this Smartphone and Whatsapp did the trick for wallets. Carry money in digital wallets or add it on the go and pay. With wallets, more and more people are getting their recharges and bill payments done online. It has decreased the business of neighbourhood recharge shops/vendors.
So, why Wallets are here to Stay?
- People want to carry less cash. Though they have alternatives of debit and credit cards. But offers (including cashback) on wallets will be a motivating factor.
- Exact amount tendering – No need of change
- On the go pay – There is no money wallet. Just add money to wallet with cards or netbanking.
- Small business, shops, hawkers who deposits their earnings as savings (or security) to bank regularly 1-2 times a week doesn’t need to go to bank. Either keep the money in wallet or transfer to bank account from wallet. With more and more business, shops, vendors, hawkers accepting payments through wallets, use of wallets will gain momentum.
Wallets are Slow
Wallets are digital, they should be fast, but in practical they are slow. By taking an example it could be better explained. At a grocery store, customer buys a 10 Rs. biscuit packet. It would take 10 seconds to give a Rs. 10 note and transaction is completed. In case he doesn’t have an exact amount the shopkeeper would return the difference. In this case it would take another 2o seconds. So total transaction time would be less than 30 seconds. When a payment is done via wallet, user first have to go the payment screen (takes 10 seconds or more). User have to get the scan code sticker/mobile number from shopkeeper (takes 15 seconds or more). User click on Payment Button (takes 5 seconds to process payment). Shopkeeper checks his mobile phone or checks customer’s mobile phone for confirmation (takes 10 seconds). So, time taken is much more in wallets when amount is small.
Taking an example when amount is large. Paying an amount of Rs. 1500 at petrol pump. General problem at petrol pumps is that Sticker is not available, staff has to bring QR Code sticker from office to car/vehicle for scanning. QR Code doesn’t work very often. Mobile number has to be entered manually. After transaction, staff member notes transaction id and other details in file or goes to office building and check there if amount has been received or not. Really a time taking process.
In some cases, where amount is large say Rs. 500 or above and transaction is being done at billing counter then it could be useful and fast. As there are 2 ways of payment. Either by scanning QR code/entering mobile number or waiting for system generated OTP and sharing OTP verbally. In such cases, exact amount would be paid by wallet. No need to tender change. Quick response time by staff member for payment.
How Wallets have some advantage over UPI?
When transferring money using UPI we may enter wrong UPI address and would not know to whom money has been transferred. This could be possible in wallet payments also when wrong mobile number is entered. But we know to which mobile number payment has gone. We can call and request the money back. A bank account is required for UPI but it is not mandatory for wallets.
How UPI have advantage over Wallets?
Transfer of amount from account in one bank to account in another bank is possible. But in case of wallets it is not possible to transfer money from 1 wallet company to wallet in another company. Though it is possible to pay money from wallet to associated merchants.