Mobile Wallet – Concept, Structure, Usage, Types, Security, Advantages & more

This article shall act as your guide, if you are keen about Mobile Wallet. We provide you with all mobile wallet related information in this article, in simplest way possible.

This is to ensure, highest understanding level is attained.

What is a Mobile Wallet?

Mobile wallet, also mWallet, eWallet or a digital wallet is a mobile technology that we use as a real wallet. It can store money and we can use it to buy or pay for something online.

Mobile Wallet has made payment method easier than ever, with safe and secure payment along with exciting rewards that the person gets after transactions.

How does a Mobile Wallet works?

Nowadays customers can access all the information about anything and anyone that is on the phone simply by opening the desired app.

If the app has protection like a PIN, fingerprint, or a pattern, then by entering the password, we can access the desired information.

When making a payment, the mobile phone makes use of a technology called near-field communications (NFC). NFC then interacts with the ready pay sites in the mobile wallet.

The mobile wallet can store information about the credit as well as debit cards along with any loyalty cards, coupons, tickets, etc.

The sender and the receiver terminal end of this mobile wallet communicate with each other through many techniques.

Because of this technicality, without the help of a device that can receive mobile wallet information, a person cannot take any advantage of this easy method of payment.

Following are the types of real wallet that can be added to eWallet:

• Boarding passes for flights
• Tickets for various events
• Debit card
• Credit card
• Supermarket points card

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Usage of Digital Wallets

While using a mobile wallet the person must transfer funds from the bank account to the wallet. This type of method is what we know as a pre-paid wallet.

If we do not use the money for a certain period, it will go back into the account. There is another type of mobile wallet, which we know as a post-paid wallet.

In post-paid the wallet is directly connected to the bank. While making a payment, the money is directly debited from the bank. There is no need to store the money in the wallet.

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Types of Mobile Wallet

Following are the three main types of mobile wallets we use:

Open Wallet – this wallet is jointly launched by the bank with a company.

With this wallet, a user can purchase any goods and services, can withdraw cash at the ATM, and can be used for transferring funds. For example, Vodafone M-Pesa.

Sem-closed Wallet – This wallet comes from banks approved by RBI and non-banks. RBI authorizes these institutions for the purchasing of goods and services.

These services also include financial services, remittance facilities among others. We can use it at some specific merchant locations.

An example of a semi-closed wallet as Paytm, Phonepe, etc.

Closed Wallet – This type of wallet comes from the company to the customer for buying goods and services completely from their company.

We cannot use the money in that wallet to buy anything other than the goods and services that the same company provides.

In case of cancellation or return, a small amount of money is charged by the company for the cancellation and in case of returns, the money cannot be transferred back into the bank account but has to be used to buy services provided by the company only.

For example, OLA, BMS among others.

How to use a Mobile Wallet or Digital Wallet?

In order to use a mobile wallet, the user must first create an account in the wallet of choice.

It is compulsory to have a mobile number that will be present on the mobile on which the wallet is created.

After creating an account and registering it with the bank account, the user must then transfer money via a debit or a credit card into the wallet.

By transferring the funds beforehand, it’ll be easier for the user to pay the amount while buying something.

At the time of purchase, with the registered mobile phone, the user must choose the wallet and make the payment.

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Are Mobile Wallets secure?

Mobile wallets are much safer than carrying all the debit and credit in the wallet at the same time.

The magnetic strip at the card can be easily read by any magnetic scanner making them more susceptible to theft and fraud.

If the card ever left the owner’s sight and got into the wrong hands then there are chances of fraudsters cloning the card and risks the privacy of the user.

Mobile wallets are secure because to take money from them, the PIN, or the fingerprint, or the password must be entered.

The respective team constantly updates the security of the mobile wallet to protect the data of the users.

The digital wallets have protection against fraud and one has to be sure of the site’s credibility to confirm that.

Advantages of a Mobile Wallet

Mobile wallets are great if the user is looking for fast, secure, and easy bill payment methods.

Following are some of the advantages of Mobile Wallet –

• Easily accessible. The user has to just download the app, create an account, register, create a user ID and a password and the wallet is ready to use. It is as easy as logging into a Gmail account.
• The user can add or remove money from the wallet directly through the bank which helps in saving a lot of time at the bank queue.
• There are many physical threats that could happen when you carry a huge sum in hand. But that is not the case with mobile phones. Since the average human spends more time on the mobile phone, the chances of a person stealing are very less.
• The details of the debit and credit cards are not mandatory; at least you do not have to enter it every time. Once you save the details, the data is secure and you can use it whenever need be. We can store the money in the wallet according to the user’s wish and can be transferred from the bank anytime.
• Sometimes paying a bill with cash can be a problem. For instance, the amount of INR 563.75 needs to be paid, then it becomes difficult for the user to search for change. Rather than using cash, by using a mobile wallet the exact amount can be paid.
• The auto facility helps the user pay the bills on time every month. On a pre-determined date, the auto facility automatically deducts the amount that needs to be paid from the wallet.
• The major advantage is that mobile wallets offer discounts, cashback offers, and gifts to the users.

Disadvantages of Mobile Wallet

Just like every coin has two sides, there are some disadvantages to a mobile wallet as well. Following are the disadvantages of mobile wallet:

• The electronic mode of payment is still a complex concept for many. Though it is rapidly spreading still there are many people who are not comfortable using this method. We always recommend that you carry cash while going to an unknown place.
• The people don’t have any idea on how much they spend since there is no limit on spending money through this method. This always leads to careless spending.
• This method is easy to understand for people who are techno-friendly and since it requires a high-speed internet connection, it might be difficult to use in places where the connection is not good.
• Many people still don’t use smartphones, making it difficult to use this easy type of payment.

Conclusion – Mobile Wallet

Since mobile phones are becoming so advanced these days, it has made the life of human beings easier.

A mobile wallet is the digital version of the wallet that a person can carry around in the pocket and also stores all the information about the credit as well as debit cards.

In other words, it is a method to pay bills online without having to stand in the queue. In a mobile wallet, the person can transfer money from the bank account or transfer money into the wallet.

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