Going cashless – is the current trend, which has gripped the entire nation. The latest buzz around “cashless”, seems to be the in-thing now, thanks to we as a nation “going digital”. Revisiting the times when credit and debit cards were introduced first, people had a thought about these being the most convenient options for all financial transactions. This concept is now being replaced by entirely to the new “Digital Wallets” available across the online platforms.
Broadly speaking, digital wallets are of three popular categories as follows:
1. One is the closed type of wallet which is specific to the vendor. Vendors like Flipkart, Bigbasket, and the rest have their dedicated wallets for each customer. The cashback amounts & refunds are credited to these wallets. You can use them for your next purchases with the same vendor but the money cannot be withdrawn nor used with any other vendor.
2. There are other types of wallets that are offered by banks which could be used for purchases and also allow withdrawal of money from these. These are the open wallets which are, uncommon these days.
3. The third type is the most common one which is gaining popularity today especially with the growth of the cashless economy- wallets like Paytm, Mobikwik, Freecharge etc. Your credits in these wallets can be used across a variety of vendors unlike that with closed wallets. These wallets, however, do not allow you to withdraw money like open wallets.
So why is all the hype around these wallets? Here some good things that these wallets offer:
- Your card is in the cloud:
If you are paying with digital wallets at a physical store, you can use your phone and avoid carrying cards or cash. If an online purchase is being done, all one has to do is to log in your digital wallet account and pay from it directly. You can forget your card and make payments either through the mobile app or by sending an SMS.
- Saves time:
How many times have you got stuck on the payment page, racing against time to fill all your card details and complete the payment before the time runs out and the session expires? Digital wallets hasten this whole process. Fill up your digital wallet, proceed to make your online purchase from the online retailers, login to your wallet and make the payments in a jiffy!
- Not to forget the promotions and cashback offers:
Most of these digital wallets gained popularity mainly because of the impressive cashback and discount coupons they offered. For every transaction you make with the digital wallets, you get attractive cashback which you could later use on your other purchases. Some of them also offer discount coupons which could be used with other vendors.
- Easier accounting and finance tracking:
With so many credit and debit cards, so many cash purchases made every month, no matter how careful you are, you always end up losing track of the income and expenses in your account. But with mobile wallets, it is so much easier. All your credit and debit information is available in one place. But, this is only possible when digital wallets become the main mode of payment.
- It all boils down to the convenience factor:
- Several payments like paying electricity bills, travel bookings, mobile bill payments, and more can all be done with digital wallets. So no longer standing in long queues for paying bills.
- No more hunting for exact currency notes for making payments at physical stores you can pay the exact amount using digital wallets instead of carrying a bulky wallet.
- Some places charge extra for the transactions that require a POS. A small percentage of transaction charges might be levied in some instances. But payments through digital wallets do not come with transaction charges.
- As the overall transaction time comes down, as the process becomes more convenient for users, cart abandonment issues or failed transactions would not happen. Thus, it also helps to improve the conversion rates.
- Installation and maintenance of POS (point of sale) devices are comparatively more expensive than accepting transactions through digital wallets.
- At the physical stores, vendors too need not worry about tendering exact change and this can also make the payment process much quicker.
- Security issues:
The digital wallet providers should incorporate better security features. User data would be stored in the cloud so implementing proper data encryption should be focused on. The security concern is, in fact, the main factor that makes most customers skeptical about using digital wallets.
- Limited number of compatible vendors:
Not all vendors and stores accept payments through digital wallets. Be it for online shopping or for payments at physical stores, currently, there are not many vendors who have included digital wallet payment options.
If done right, if more vendors come forward to use digital wallet payments, if digital wallets continue to come up with better promotions more users would be encouraged to use them. This would bring a revolutionary change in the way we make financial transactions.