E-wallet is a type of electronic card which is used for transactions made online through a computer or a smartphone. Its utility is same as a credit or debit card. An E-wallet needs to be linked with the individual’s bank account to make payments. The main objective of e-Wallet is to make paperless money transaction easier.
E-wallet is a type of pre-paid account in which a user can store his/her money for any future online transaction. An E-wallet is protected with a password. With the help of an E-wallet, one can make payments for groceries, online purchases, and flight tickets, among others.
E-wallet has mainly two components, software and information. The software component stores personal information and provides security and encryption of the data. The information component is a database of details provided by the user which includes their name, shipping address, payment method, amount to be paid, credit or debit card details, etc.
For setting up an E-wallet account, the user needs to install the software on his/her device, and enter the relevant information required. After shopping online, the E-wallet automatically fills in the user’s information on the payment form. To activate the E-wallet, the user needs to enter his password. Once the online payment is made, the consumer is not required to fill the order form on any other website as the information gets stored in the database and is updated automatically.
Features of e-Wallet
Few features of e-wallets are:
Accept payments instantly: If you own a small or medium business, you can accept payments instantly at 0% fee (introductory offer) from customers making cashless payments. Most leading e-wallets support POS transactions without any need of additional equipments like card scanners/readers. For processing the transaction, a payment link is sent to the customer wherein they can enter their card details without sharing it with the merchants and make the payment through the e-wallet.
Create a virtual card: Many banks such as ICICI and Axis Bank as well as wallet providers like freecharge are offering virtual card services integrated with their wallet apps. It is similar to using plastic money with a preset spending limit. You can load money on your virtual card and then use your credentials to make payments online. It is a PCI-DDS (Payment Card Industry- Data Security Standard) compliant mechanism and is compliant with banking security standards.
Transfer money to bank accounts: You can, not just accept payments but also transfer the balance to your mapped bank accounts using m wallets. However, wallet app providers can deduct 1% to 5% of the amount transferred from wallet balance as fee for the service offered. Currently as per RBI mandate, wallets such as PayTM, freecharge etc. have a monthly cap on the amount of money you can transfer from your e wallet to your bank account.
Redeem points as Cash: Few wallets such as Mobikwik offer the facility to convert points you earn through your cashless transactions into wallet balance. If you have a debit or credit card from any of the ‘Max Get More’ – supported banks or have a Payback loyalty program membership, you can redeem your Mobikwik rewards points as wallet balance.
Split bill: Few m wallets offer you the facility to split your expenses with the same wallet users. You can do this by entering the amount, purpose and specifying the phone numbers of the people you intend to split the bill with. Doing this will generate a payment link, which will be sent to the people who owe you money. They can then use their own wallet to make these payments.
Chat Messenger app Integration– To increase your convenience further, freecharge has integrated its payment service through the popular messaging app, Whatsapp. With this feature you can transfer money to any of the freecharge users on your whatsapp contact list simply by typing amount along with FC on the chat window. For e.g. typing and sending “150FC” to a contact will transfer Rs. 150 into their freecharge account from yours.
Cash Pickup: E wallets such as mobikwik offer this feature wherein users can request cash pickup for a fee by adding money to their wallet. However, this service is limited to a handful of cities as of now. Going forward if available at more locations, it will definitely be an option that people use in case of cash-only emergencies.