A Guide To Mobile Wallets

A guide to mobile wallets

Confused about what a mobile wallet is all about? Here's all that you need to know...
After reading this feature, you will know why the super annoying habit of giving a candy instead of a rupee coin is doomed to rest in peace.
The companies that launched mobile wallet services wanted us to use their services but never bothered to explain the nitty gritty of this new mode of payment. So, in one of the television commercials, when an actress asks the viewer to pay through chat, she makes no sense, which is why we sat down with two experts and asked them to decode the mobile wallet category for us. Here are the takeaways. 

What is a mobile wallet?

Simply put, it's a mobile-based virtual wallet, where you preload a certain amount in your account created with the mobile wallet service provider, and spend it at online and offline merchants listed with the mobile wallet service provider. For example, if you go to a coffee shop A, which is listed with XYZ mobile wallet, you can pay for your coffee through the phone. Depending on the service provider, you can also pay through app, text message, social media account or website.

Transactions you can make

Anything and everything! Right from utility payments to e-tailing and offline payments, you can perform most of your daily transactions.
Types of wallets
There are four types of mobile wallets in India - open, semi-open, semi-closed and closed. Open wallets are the ones that allow you to buy good and services, withdraw cash at ATMs or banks and transfer funds. These services can only be jointly launched with a bank. M-Pesa by Vodafone and ICICI is one such example. Apart from the usual merchant payments, it also allows you to send money to any mobile numberbank account. Airtel Money is a semi-open wallet, which allows you to transact with merchants that have a contract with Airtel. You can't withdraw cash or get it back. You'll have to spend what you load. Then, there are closed accounts, which are quite popular with e-commerce companies, where a certain amount of money is locked with the merchant in case of a cancellation or return of the order, or gift cards. Lastly, there are semi-closed wallets like PayTM, which do not permit cash withdrawal or redemption, but allow you to buy goods and services at listed merchants and perform financial services at listed locations.

What happens to the money you preload?

Obviously, when you are crediting money to a mobile wallet, you would want to know what happens to the money till the time you don't spend it, and is there a possibility that the mobile wallet service provider can have a free run with the money. Worry not! Reserve Bank of India, the big daddy of financial providers in India, has a com plete set of guidelines for mobile-based payments, which takes full care of customer's interests. Explains Vijay Shekhar Sharma, founder CEO, PayTM, "When you register with us, we create an escrow account in which your preloaded amount is deposited. Only when you make a payment, the respec tive amount is credited to PayTM account. We don't have any control over your money, so there is no question of the service provider running away with the customer's money."

However, not all the wallet types are required to open an escrow account so it's best that you check it with the vendor before registering with one.


Your wallet can be snatched, misplaced or pickpocketed, your mobile wallet cannot be. But remember, your mobile can still be stolen. Secondly, if the bill is of Rs 353.53 or Rs 462.65, you will not have to run around asking for change, and no one will ever give you a candy instead of a rupee. Also, mobile wallets allow you to pay in one-tap unlike net banking that calls for opening several browsers and are time consuming. Suggests Soma Sundaram, founder CEO, iKaaz, "See, when you make a payment through net banking or through a debit or credit card, you are disclosing your sensitive bank data on the merchant's site or establishment; it can lead to unwanted financial happening. But when you use mobile wallets, you restrict the exposure of your confidential data, which single-handedly wins the case for a service like ours."

The biggest advantage of mobile wallets is the massive rewards in the form of discounts and cashbacks.


Only mobile-savvy people (with dependable and speedy internet connection) can use such services. Also, there are only a limited number of merchants currently listed, so you will still need net banking or cash or card. Plus, there is a limit to the amount you can deposit in mobile wallets and daily spend, which means mobile wallets are useless for high value payments. Also, considering the dismal battery back-up of smartphones, you can never be sure whether the phone will be alive even for that one-tap payment.

Major Players: Airtel Money, ikaaz, mRupee, Vodafone m-Pesa, Oxigen Wallet, Paytm, Mobikwik and Idea Money Experts: Vijay Shekhar Sharma, Founder CEO, PayTM and Soma Sundaram, Founder CEO, iKaaz

True Story

According to a tweet, a mobile payment worked so well for a guy in Bengaluru that he ended up earning Rs 75 for a dinner he had at a local restaurant.

Data in favour of M-Wallets

29% of all online transactions globally are done on mobile
80% of the world's adult population will have smartphones by 2020
Rs 1,200 crore plus will be the value of the Indian mobile wallet market by 2019. The figure stood at Rs 350 crore till last year
30% is the annual projected growth in the Indian mobile wallet market from 2015 till 2019