E-wallets and its Future in India

Transcription

1 Sharma & Vermani, Journal of Applied Computing, 2(1):9-13, 2017 e-issn Available online at: REVIEW ARTICLE Journal of Applied Computing OPEN ACCESS E-wallets and its Future in India Bhanu Sharma 1, Dr. Shalini Vermani 2 1 Apeejay School of Management, New Delhi, India. 2 Apeejay School of Management, New Delhi, India. Abstract In today-world, smartphone has become essential part of daily life. Due to technology, mobile users can nowadays use their smartphones to make money transaction or payment by using applications installed in the phone. When smartphones can function as leather wallets, it is called Digital Wallet or widely known as Mobile Wallet. The present study tries to study the various factors that can affect a consumer s decision to adopt digital wallet as a mode of online payment. Apart from this, the study also attempt to find out the various risks and challenges faced by users of digital wallet. A digital wallet is operative to receive, maintain, and allow the retrieval of various forms of enhancements thereto, such as an electronic coupon, an electronic gift, an electronic discount, and the like. The digital wallet is also operative to function as a primary or main digital wallet and thus accept and utilize a plurality of subordinate digital wallets, each one of which is separately operable within the framework of the digital wallet. Keywords: E-wallet, Mobile wallet, Security. Citation: Sharma & Vermani (2017). E-wallets and its Future in India. Journal of Applied Computing, 2(1):9-13. Received: Jan 1, 2017; Revised: Feb 13, 2017; Accepted: Feb 20, 2017 Competing Interest: The author has declared that no competing interest exists. *Corresponding Author: s_vermani_s@yahoo.com Introduction In everyday life, people used to carry many different types of cards. These cards include credit cards, debit cards, driving license, transportation passes, loyalty cards and many other types of cards. These cards are typically carried in a wallet or purse. A person may need to use any number of cards during the course of a day. Many people also carry mobile devices with them, such as smart phones, tablets, laptops, and ipad etc. A person that carries a wallet or purse also has to secure the contents of the wallet or purse at all times to protect against theft and fraud. If a card is lost or stolen, it can be used in unauthorized ways, leading to identification theft, fraud, or financial loss. In addition, as many transactions are increasingly performed without the need for physically possessing the card (e.g., online purchases), the mere exposure of the information found on a card to an unauthorized person is a risk to the card holder. Thus, there is a need arises to reduce the number of cards carried by a person, and an opportunity to address that need using some technology which can eradicate the use of wallets and cards system. In addition, there is a need to secure card and card s information so that a card and its information is not exposed to unauthorized people. Journal of Applied Computing 9 Vol. 2 Issue

2 E-Wallet (Electronic Wallet) also known as Digital Wallet is an Unified Payment Interface which acts as platform by which one person can transfer money to other in fractions of seconds. It is an online prepaid account wherein one can stock money, to be used when required. As it is a pre-loaded facility, a person can buy a wide range of products varies from booking airline tickets to buying grocery items without swiping a debit or credit card. How e-wallets can be used? Today almost all e-commerce companies including Flipkart, Paytm, Freecharge have their own e-wallets systems. The following are the steps by which e- wallet are set up and used Why E-wallets? Fig. 1 So, what is driving, enabling and creating the exponential growth opportunity of e-wallets usage in India? The major reason for this is increasing the number of smartphone users which enables internet penetration not only in urban but also in rural parts of India. Increasing government initiatives like Digital India is another catalyst. Recently, the RBI had issued certain guidelines that allow the users to increase their limit to Rs 1, 00,000 based on certain Know Your Customer (KYC) verification. At present, mobile payments form a small part of the overall digital payments industry in India. However, the contribution from phones and tablets is expected to increase to 30 per cent by Mobile payments in India are estimated to grow from $86 million in 2011 to $1.15 billion in 2016, with a compounded annual growth rate (CAGR) of 68 per cent, according to estimates. The e-wallet segment includes transfer of money, services related to banking transactions, value-added services such as shopping, ticketing, recharging, and bill payments. In this segment, the highest, 38 per cent market share is captured by money transfer businesses, followed by recharge and bill payments, and utility areas by 30 per cent and 12 per cent, respectively. According to a recent report from TechSci Research titled India Mobile Wallet Market Opportunities and Forecast, 2020, the mobile wallet market in India is projected to reach $6.6 billion by As a testimony to the opportunity offered by the Indian mobile wallet, global investors are signing cheque worth millions of dollars for investing in these smart ventures. In a bid to garner market share, almost all players are offering cash back and discounts, which can be used for another transaction. Some players even provide offline way of wallet balance top up. Advantages of E-wallets Ease to use as we do not need to remember our details of debit/credit card for every transactions No chance for decline of payments. Much safer and quick as compared to doing transactions using debit card/credit cards/net banking. No need to carry hard cash or any type of cards. It will be possible to make instant payments. Just like exchange of cash at any moment, we can exchange and transfer money anytime. There would synchronization of data from multiple platforms. Bank accounts, credit and debit cards, mobile accounts and bills - all will be interconnected and help in better management. It is like everything is under one roof. It is extremely useful for humongous unorganized sector where cash is considered as the most suitable medium. Exchange of money through mobile wallet at chaat stalls, street vendors, small shops, etc. would remove the need to carry cash/cards at such places. Limitations of E-wallets Inter-transactions between two different companies of wallet cannot be done. As there is no linkage with the bank, so interest cannot be earned on the money. In India, e-wallet cannot be used in all the means of transactions. Revealed password of e-wallet can lead to theft. Mobile network connectivity is the biggest impediment. Network problems and reliable Journal of Applied Computing 10 Vol. 2 Issue

3 and fast internet connectivity is not available in most of the developing countries. Reluctance of people towards using of e- wallet as most of the people believes in cash. Only dependent upon the mobile devices Limited merchants for transactions Restriction of money to transfer internationally. Types of E-wallets Closed wallet A closed wallet is a kind of wallet which allows making purchase exclusively from its service provider. These type of wallets are offered by Flipkart, Snapdeal etc in India. Semi-Closed wallet A semi-closed wallet allows making purchase and payments on multiple venues. These type of wallets are approved by Reserve Bank of India. Generally, in this type of wallets, companies have tie-ups with the merchants across a country for making transaction between the customers and the merchants. In India, companies like Paytm, Oxygen, PayU Money, and MobiKwik are examples of semi-closed wallet. Semi-Opened Wallet - These are the type of wallet which can be reloadable or nonreloadable, and can be used at any point-ofsale terminal, but they do not allow cash withdrawal. For example: e-gift cards by Flipkart, amazon, Paytm, BookMyShow etc. Open Wallet Open wallets are wallets which are provided by the Banks. This type of wallet allows all functions of semi closed wallet and in addition to that it also allows cash withdrawal at ATM. SBI buddy and HDFC PayZapp are the examples of Open wallet in India. E-wallets in India As shopping patterns continue to evolve, so does the payment platform industry in India. Mobile wallet is a new concept in India that has been surpassing credit card usage and is slowly beginning to replace the traditional payment methods. Apart from payments options like Cash on Delivery, Debit Card/Credit Card, Net Banking etc. E-wallets are becoming the hero of e-commerce/mcommerce industry in India. Not only shopping can be done through e-wallets but also some of e-wallet service providers opens the gate for making transaction on mobile recharges, for electricity and water bill payments, school fees payments, booking for Railways, Airways, Buses, Taxis, etc. Indeed Instant Money Transfer from one person to another through e-wallets is also a buzz in India. People find it is a convenient source as compared to Net Banking or Mobile Banking from their respective banks. Perhaps looking at the trend of using e-wallets by people in India, most of the banks also came up with their e-wallet services to attract new customers and to retain the older ones. People not only finding it easy to use but hassle free. With the emergence of e-wallets, people need not to carry cash, all they need is to download the app in their smartphones and making their transactions cashless at their own convenience. The mobile wallet user base in India has even surpassed the total number of credit cards issued in the country. The RBI data shows that till November 2015, around 22 million credit cards have been issued by 55 banks, while a rough estimate shows there are more than 100 million wallet users in India A mobile wallet, in simple terms, is a virtual mobilebased wallet where one can store cash for making mobile, online or offline payments. Following are the top 10 mobile wallet service providers in India. 1. Paytm Paytm also known as Pay through mobile is a Noida based startup owned and runs by One97 communication Private Limited heading by Mr. Vijay Shekhar Sharma. It is one of India s largest mobile commerce platforms, which offers its customers a digital wallet to store money and make quick payments. Being working on Semi-Open Wallet Model, Paytm started its e-wallet service in 2014 and within a span of 1 year it crossed 100 Million users in India who carries out 75 Million Transactions every month. Paytm e-wallet is available on ios, Android, Windows, Blackberry and Nokia Ovi Store. Various Companies like Food panda, Uber, IRCTC, and Indigo Airlines accepts Paytm wallet services. Till the end of 2015 Paytm claims that its wallets are accepted by more than 80,000 merchants all over India and company plans to reach 10 million merchants by the end of Freecharge Freecharge launched its digital wallet in September 2015 in partnership with the private sector lender YES Bank. The wallet enables payments for consumers using technologies such as host card emulation (HCE), near field communications (NFC), QR codes and Bluetooth low energy (BLE). Freecharge had also partnered with FINO Paytech, an Journal of Applied Computing 11 Vol. 2 Issue

4 alternate banking channel and payments bank licensee, as FINO got its semi-closed prepaid payment instrument license renewed by the Reserve Bank of India in August. Within 4 weeks of its launch, company claims to crossed 5 Million e-wallet users with an average of transacted 5 times a month by it users. The company is targeting to reach 35 million e-wallets users by MobiKwik MobiKwik was founded by Bipin Preet Singh and Upasana Taku in 2009 headquarter based in Gurugram. They tied up with various online merchants such as ebay India, BookMyShow, Dominos India, Shop Clues and Snap deal to provide accessibility of their wallet as a payment option on e-commerce sites. MobiKwik also has its 'Cash Pickup' service points in selected cities that facilitates cash to be directly added to MobiKwik wallet. At Present MobiKwik claims to have 17 million users in the country with more than 50,000 Merchants Also MobiKwik focuses more on boarding offline merchants. 4. PayUMoney Available on 8500 websites, PayUMoney becomes the most widely available wallet service in the Indian e-commerce Industry. In order to differentiate themselves from other players, they provide a wide range of benefits that include one-touch check out and discounts/cash-back offers on every transaction made. This e-wallet also provides instant refunds on order cancellations and buyer protect to ensure the right purchase and customer satisfaction. 5. Jio Money Reliance Jio has also launched its digital wallet service as Jio Money wallet, for Indian consumers, which further takes this mobile wallet industry to yet another level. Wallet wars got hotter with Reliance entering the space. Besides the money storage & transfer features offered by other wallets, the company also aim to target offline merchants to adopt wallet technology to accept payments. The company has already on-boarded 50,000 online merchants for the service. 6. Micromax Udio Wallet Micromax and Transerv have launched Udio mobile wallet it goes without saying that it works the way others in this segment do. Udio is also a new app and its reach is limited compared to older players like Paytm and Mobikwik. The company claims it to be "India's first Social Mobile Wallet", it creates a social media network of your contacts, which then makes transactions easier. It offers services like split bills and gift vouchers for friends. 7. Ola Money Ola Money wallet, which was earlier limited to be used only with the Ola Cabs app, is now a standalone mobile wallet on Android, ios and Windows mobile platforms. Ola Money allows transaction at several online retailers and some offline retailers. It also allows you to do prepaid recharges, bill payments, Mumbai metro recharge and DTH bill payments. You can also transfer and receive money through the Ola Money app. 8. Unified Payment Interface The Unified Payment Interface is a better option (cheaper; faster and less restrictive) for those who do not think much about the discounts and like using mobiles for transacting. 9. Virtual Credit Cards We do not have virtual credit cards like Samsung Pay in India. All we have is pre-paid cards tied with credit card companies. It would be interesting to see how they fare. The idea of a virtual credit card because it offers credit instead of a pre-paid wallet where the carrot is only cash-back. Challenges and Risks Associated with Mobile Payments People are unsure about the security of the transactions and are not aware of the wallets. The people are Unfamiliar with mobile apps from the brands/ stores they shop from. People are also worried about losing their phone and because of this reason they don t use digital wallets. They don t have a mobile phone or other mobile device and Prefer to use paper money more than cards. Inability to adapt to mobile payments can put your company at a competitive disadvantage New processes create new security vulnerabilities. Over-the-air provisioning of payment credentials and applications, for example, potentially creates new attack vectors for eavesdroppers to steal and misuse customer data. Journal of Applied Computing 12 Vol. 2 Issue

5 Overly cumbersome and costly security schemes can hinder an organization s ability to adapt quickly to new opportunities or to scale its business processes to meet rising service demand. Attackers can steal and misuse data, leading to painful disclosures, adverse publicity, and fines. Rising transaction volumes can lead to performance bottlenecks as inefficient processing capacity and degrades the customer experience. The Road Ahead With the introduction of the value-added services that go beyond just payments, mobile wallets will definitely become a new marketing channel. For instance, mobile wallets are gearing up to provide an instant credit facility. The micro-credit program will help the users to take small loans and pay interest along with the amount at the time of repayment. To break the competitive logjam and allow different players to build mobile payment applications more easily, more collaboration on open technology platforms has to be done. Because when they do, things are going to move very quickly. Just look how long it took consumers to embrace online payments. They went from I ll never buy anything online to I love shopping at Paytm in less than 4-5 years. Mobile wallets are definitely the future of online and offline payments in India. Mobile wallet is rather a new topic in this technology era; henceforth the points of view might be limited. This research paper focuses mainly on consumers, yet in fact, in order to make mobile wallet widely accepted, it requires much effort in terms of change from many related stakeholders, especially the merchants who will have to adapt and change the traditional way of payment. Same story with financial sector since mobile wallet is heavily based on finance. References 1) y-indians-shop-with-cashlesswallets/article ece 2) 3) 4) mobile-wallet-market-forecast-and-opportunities- 2020/446.html 5) 6) freecharge-wallet-10m-users/ 7) 8) 9) 10) Conclusion In addition to Physical wallets the e-wallets are satisfying our core requirements i.e. Payments mechanism which is not only restricted to online transactions but also some extent to offline transactions. But I firmly believe that Future of e- wallets would be bright in India and with the emergence of technology, e-wallets will provide more value added services to us. Journal of Applied Computing 13 Vol. 2 Issue