I’ve been abroad for around a year. Now I’m back and I can see a lot of things have changed. One thing in particular: Wallets. The kind of wallets I’ve been used to is the physical one. Enter PayPal & Google (I know these only), you enter card and/or bank details and you are done. Worked on Apple Pay too, similar thing. In India, there is another league going on.
In India, the term Mobile Wallet is probably new and the mobile wallet they’ve implemented is just made Physical wallet to Digital wallet with exactly same features.
What you do with
- Physical Wallet: keep cash & cards
- Digital Wallet: Keep cash & cards information.
Your Physical Wallet is not capable of getting you discounts. The only discount it gives is to the thief who steals it. Digital Wallet on other hand gives discount to you only because of tie ups with other vendors and considering norms, may not be pick pocketed.
All seems rosy and I got myself my first Indian version of Digital Wallet. Felt amazing, now I can load up only the amount I want and use it where I want. Showed it to my dad, who doesn’t even like Internet Banking, said only one line – These wallets are useless.
Struck me like anything and I realised, what the heck is this. In PayPal, Google Wallet & Apple Pay the money is in your always in your account. When you use, it is deducted from your account. In case of refund, money returns to your account. Some may say they are not wallet but a medium of payment. Well, yes they are but they are wallet too as you can save multiple cards & account. And just like physical wallets, they are personal because money is with you in your account only.
The wallet in India, you deduct the amount from your account. Pay using the wallet. In case of refund money goes back to your wallet. This approach is very archaic and does not actually represent a mobile wallet. This is enacting the way physical wallets work. Physical example, you take money from ATM using Debit Card, Pay using Cash & refund amount goes in as Cash to your wallet/purse. It’s just like you keeping money in your neighbours wallet who is always ready to pay for you till he has “your share” of cash left.
In UK, where major type of account is Current Account & not Savings Account. Even in Savings Account the rate of interest is not very attractive. But we’ve other wallets because of simple reason, money belongs to you and not to anyone else. Banks are to keep your money safe. In India, the more amount stays in Bank, much is the benefit apart from keeping it safe. Using these wallets in India, you take out cash from your account.
- You miss out on benefit from bank (4% in Savings, 8-9% in Fixed Deposit)
- They don’t give benefit of money stored in wallet
- The increasing number of mobile wallet or ways of implementing it, your own money is widely distributed
- Some vendors even went further by forcing refunds in such wallets or as promo codes
They are seemingly forcing users towards this skewed form of wallet because:
- They get money before hand, kind of small loans
- They don’t need to pay you interest
- With forms of investment, they can fetch better rates yet not bound to pay you
- You are forced to use the related services weaved with Wallet (read partnerships) because the better service provider does not use the particular wallet
We’ve not yet seen advent of Gift Cards in India but these Mobile Wallets are actually a way of Gift Cards which you give to yourself. I don’t see these wallets changing direction but till then they are bad for you and your money. Unless something is done about it, this will create a very bad form of financial market in India, with your money everywhere but not with you.