A well researched article on mobile wallets

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(Image via indusage.com.au)

The demonetisation drive, which the government has undertaken to abolish black money by the common sense logic of abolishing money, has brought a lot of focus on mobile wallets.

In these times of currency crunch, mobile wallets are a godsend as they offer the harried citizens a viable choice to blame somebody else other than just the government. The point is without having to go to your bank or stand in an ATM queue, using mobile-wallets you can still access your money and proceed to use it before the government gets any more new ideas to get it.

When you talk of mobile wallets there is a lot of confusion, but the good news is: the confusion is admittedly a lot lesser to the one now surrounding the use of actual money.

To understand how mobile wallets work and how best it can be used by the common man, I spent, for research purposes, an entire day on the internet, during which I was able to read one full article relevant to the subject while I managed to chat with several of my friends on Facebook and Twitter and read plenty of unrelated stuff.

But here is the deal with the mobile wallets: They operate on the simple but sound principle that is at the core of all modern corporate management philosophy: The consumer is not a moron. He is actually a complete dolt.

Okay, just kidding. Mobile wallets are just digital versions of your regular wallet, except that your regular wallet can be picked by robbers and you may lose all its contents, whereas your digital wallet cannot be stolen at railway stations or markets or any other crowded place, but — this is the beauty of modern technology — it can still be breached and you run the risk of losing not just its contents but your entire bank savings.

Well, that is also a highly distorted definition of mobile wallets. We will have a go at it one final time: Mobile wallets, as the name makes it obvious, are about using your regular wallet to make payments to banks or credit card companies that will help you pay the mobile wallet company which will help you carry out your online (or even offline) transactions.

From what I gathered during my research, a lot of people are quite wary of parting with the details of their debit or credit cards for online transactions. So to avoid the understandable unease of using debit/credit cards on e-commerce sites, mobile-wallet companies are offering a smart alternative: You can use the same credit/debit cards on mobile-wallet companies’ site. They are, in essence, e-commerce sites that help you to shop at — why not? — other e-commerce sites.

The thing is when you register your card details and transfer funds to a mobile-wallet company, it immediately creates, for safety purposes, an ‘escrow account’, as mandated by the RBI, yes, the same RBI that has just now ‘banned’ your own money that was all along lying safely with you. So basically you can forget safety wherever your money is parked.

Mobile-wallet companies say they don’t use the details you provide anywhere else and also assure that they have high-end technology to prevent ‘digital theft’, which is very comforting till you realise that these companies are mostly funded by venture capitalists who exist to confirm that there is no God in this world.

Anyway, mobile wallet companies make much of their money — you may want to write this down — by losing it.

Let me elaborate: When you, say, recharge your DTH connection in an offline retail shop, you pay the recharge amount and the retailer passes on the money to the DTH service provider and gets a small commission for the same. But online, things are much more evolved. You transfer the DTH recharge amount via your debit/credit card to the mobile-wallet company and it —- remember this is something designed by highly-rated MBAs and technical wizards — gives you cashback, sometimes more than the actual amount you paid it. The mobile-wallet company also gives you bonus points using which you can acquire more bonus points that are quite helpful to get even more valuable points, which can be eventually redeemed for nobody knows what. The amount of unredeemable bonus points is more than the amount of black money in this country.

Whatever may be the pros and cons of mobile-wallet companies, more and more people are finding them useful and their market in India is expected to grow. The current Indian market size for m-wallets stands at about Rs 350 crore and is estimated to rise to Rs 1,210 crore by 2019 by which time your local ATMs should have, hopefully, become operational again.

K Balakumar

About K Balakumar

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