Guideline to Mobile Wallets, the future of Payments

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Mobile-Wallets---the-futureWith the crucial penetration of e-commerce in India, the way people are buying their things is changing immensely and so is the mode of payments. Mobile Payment technology is catching up fast and thick among online buyers. The inclusion of credit or debit cards is fading away though there are still payers who use the mode. However, mobile payments or mobile wallets is a sure subject of headlines almost every day as some new (betterment) comes up with the payment mode spreading widely at an unprecedented pace.

Paytm is one big name from the mobile payment gateway industry leading in India and spreading through other regions of Asia. With the technology being introduced by Apple Pay on the global platform; the Delhi-based startup was quick enough to follow the technology and build up an Indian version of the same. Though the company has stiff competition coming from contenders FreeCharge and Mobikwik, it is striving hard to keep up the lead position and expand its business to other countries in Asia and beyond.

Mobile Wallet is the future of Wallets-

According to the market research studies and information from experts working in the financial sector, mobile wallets are ought to be the future mode of payment for major population around the globe. The medium of payment will gain further popularity as companies are collaborating with renowned card payment brands such as Visa Inc, MasterCard Inc and American Express Co and others.

M-wallet industry stands at 350 crores now and is estimated to be worth 1,210 crores by 2019

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Essentials about Mobile Gateways that everyone should know-

There are three types of mobile wallets that are in use presently all around the world. There are:

  • CLOSED WALLET
  • SEMI-CLOSED WALLET
  • OPEN WALLET
  1. Closed Wallet: This is wallet issued by a company to its consumers for exclusive purchase and payment activities with it only. This sort of a wallet cannot be utilized elsewhere.

Reputed online shopping portals like Flipkart and Snapdeal are best examples as they offer such a wallet in India.

  1. Semi-closed Wallet: This kind of a wallet can be used to buy goods and services from a particular list of merchants that have a signed agreement with the issuer. Under such a type the payment company enters into a contract with the merchandisers and thus their bills can be paid using the payment mode. Payments for financial services may be included provided there is the said contract between the issuer and the service providing entity.

Apple Pay, Paytm and FreeCharge are top examples for semi-closed wallet systems.

  1. Open Wallet: These are wallets that can be only issued by banks and no other sources. One can make payments for any goods and services to any merchandiser irrespective of the locality. Paying for financial services are also includes using this wallet; moreover withdrawal of cash from automated teller machines (ATMs) is also possible.

M-Pesa from Vodafone (in collaboration with ICICI Bank), Pay ZAPP and Pink Pay are examples for open wallet payment modes.

RBI permit and Eligibilities-

As mentioned above, Open wallet mode of payment can only be issued by banks with prior authorization from the Reserve Bank of India (RBI). Non-Banking Financial Companies (NBFCs) or any other persons can issue the other two kinds of wallets (closed and semi-closed) and there is no requirement for any authorization yet the RBI needs to be informed of the same.