How do mobile wallets work?. Mobile phones are becoming a trend and…
Tags: Wallet, Mobile, Money

Mobile phones are becoming a trend and all of the people whether they are old or young want to keep a mobile phone handy and use various applications to make their life easier and comfortable. Mobile phones manufacturers are also making efforts to make the phones user-friendly. The applications that are used in the mobile phones are made by various companies so that the user does not have to visit the offices and banks for various purposes and can use the mobile phone to complete their work. Mobile phones are becoming a first priority for people because all the tasks which are meant to be performed by moving from one place to another can be handled only from one tap like sending an official email from your mobile phone is just a matter of few minutes. Similarly, when you are carrying currency in your pocket and move out of your home to purchase some commodity you need to give some money to the owner of the shop and then you get the needed item. But today, you can keep your money in the mobile phone so that you do not have to carry anything else with you when you are out of the office or home.

Mobile wallets is the term used for various money related concerns. These are something which are exactly similar to your wallets. The things that you keep in your wallets are present in your mobile wallets now. Currency which is present in your wallet is kept in your mobile wallets and wherever needed can be transacted from one account to another as the same way you make a physical payment to the shopkeeper. An example of mobile wallets is an application in the mobile phone which is named as Paytm. You can use this application to make a payment for your electricity bills, water bills, book a flight or a hotel room in case you are moving out on vacation. Internet has become a very useful method for making such payments even if you are located out of the state or even out of the country. Paytm is regulated by the Reserve Bank of India so, the payments that you are making will be kept confidential and the information that you share while making the payment like your debit card number and CVV number are also kept away from frauds who are trying to hack the network of various banks. These mobile wallets provides a very useful way of shopping and even great discounts are added to your accounts if you purchase any item with your mobile wallet.

There are various kinds of mobile wallets which are introduced in the market and works with the specific module, which are:

1) Closed wallets: A closed wallet is a mobile wallet or an e-Wallet which is designed for making full or part payment for the services directly provided by the wallet issuer. A closed wallet cannot be used for making payments to any third-party service providers or for money transfer. For example, if I am an owner of closed wallet, I will provide Rs. 1100 of purchase on a payment of Rs. 1000 till the time the user buys from my shop and I will provide an incentive of Rs. 100 every time a user purchase.

2) Semi-closed wallets: Semi-closed wallets which have a specific contract with the issuer to accept the payment but do not permit cash withdrawal & which enables the procuring of goods & services which consist of financial services at a group of clearly recognized merchant locations/establishments. For example, MobiKwik is an application which uses semi-closed wallets as you can get your flight bookings and also your hotel bookings on a single go once you are planning a vacation. The semi-closed wallets use various merchants and do not depend on a single point of purchase like closed wallets.

3) Open wallets: Open wallets are the ones that allow you to buy goods and services, withdraw cash at ATMs or banks and transfer funds. These services can only be jointly launched with a bank. Money which you are carrying in the open wallet can also be taken out physically in the form of cash. M-Pesa by Vodafone India Ltd in partnership with ICICI Bank Ltd. Is an example as M-Pesa money can be used to buy goods and services and also withdrawn from ATMs.

Mobile wallets have now become a standard way to pay money to people and there can be many advantages of mobile wallets such as:

1) These wallets are used to make safe transactions. These applications and mobile wallets are only accessible once you have set up a password on your mobile phones for using these applications. These wallets are highly encrypted and various banks are running these applications through various merchants.

2) Paying through mobile wallets is very useful because you do not have to worry about change which becomes a hassle sometimes.

3) You can use these mobile wallets for many things like recharging your mobile phones on one go.

4) You get massive rewards in the form of cashbacks when using your mobile wallets for transacting money.

5) These mobile wallets are less time consuming in comparison to net banking which involves opening of several browsers for making a single payment.

There can be disadvantages of mobile wallets as everything has some pros and cons associated with it:

1) These wallets are only useful for mobile savvy people and work only with the high-speed internet connection and updated version of mobile phones.

2) These wallets are still not a substitute to debit cards and people prefer using their credit cards/debit cards/UPI for purchasing and payments.

3) These wallets are also limited to the amount of Rs.20,000 which means that you will not be able to keep more than this amount in the mobile wallet and it is useless for transactions involving high amount.

4) These wallets are also dependent on the battery backup of the smartphones and it is not necessary that these mobile wallets will be always available for making payments.

Conclusion: Money is an item which is used to purchase or sell a commodity and whenever you are using money, you need to take care of your cash while carrying it as it can be lost but carrying money in the mobile wallet is easier as there are less chances of losing your money and even if the mobile phone is lost the person who gets the mobile phone will not be able to access the money because these wallets are password protected.

You may also leave your opinions on mobile wallets in the response section about it being an advantage or disadvantage depending on their usability.