R. Dinakaran , heads the Internet edition of The Hindu Business Line and writes on technology and social media.

R Dinakaran

How e-wallets work

| Updated on January 15, 2018


Not many are comfortable using e-wallets. Not without a reason, of course. They are more worried about security than about the ease of using e-wallets. What many do not know is that e-wallets are safer than debit and cards. How?

Before going to the 'how', let us see the e-wallet providers. The list is in random order and not sorted according to size or any other criteria.

1. Paytm

2. Mobikwik

3. FreeCharge (from Snapdeal)

4. Oxigen

5. Pockets (from ICICI Bank)

6. Chillr (from HDFC Bank)

7. Payzapp (from HDFC Bank)

8. State Bank Buddy (from State Bank of India)

9. Ola Money (from Ola Cabs)

10. Airtel Money (from Airtel)

11. m-Pesa (from Vodafone)

12. Idea Money (from Idea)

13. Ruplee

14. Cube Bills

15. Udio

16. ftCash

17. YesPay (from Yes Bank)

18. Zeta

19. Future Pay (from Future Group)

20. PayUmoney

21. JioMoney (Reliance Jio)

Now, the advantages:

The biggest advantage in using a wallet is safety. You can load wallets whenever you want - even just before a transaction. You can load them with small amounts of money - even the exact amount you are going to spend. What is the advantage here? The moment you spend the amount loaded, your wallet is empty. This is the biggest advantage. Unlike credit or debit cards, where you have to be extra careful as they can have big balances or a huge credit limit, wallets can be loaded with small, or even exact amounts.

Many online - and even brick and mortar stores - accept wallets. If you are shopping online, while making the payment, you have to select the Wallets option, and then, the wallet you are using. You give your wallet credentials. You will get an OTP in the mobile. Once you key in the OTP, the payment goes through.

While using it in physical (brick and mortar stores), there are several ways in which wallets operate. For instance, if you are making a payment through JioMoney in a Reliance outlet, you have to input the billed amount. A barcode is displayed in the mobile which will be visible for two minutes. The cashier has to just scan the barcode and the payment is done. The big plus point here is that you don't even have to hand over your mobile to the cashier. Did you see the difference between credit and debit cards? In the case of physical cards, you have to hand over the card to the cashier to swipe it in the machine. And who knows, he may be using a skimmer. But with the e-wallet, the phone stays in your hand.

In the case of Mobikwik, once the you have to tell the cashier your registered MobiKwik phone number. Once he enters the amount in the machine along with your mobile number, you wil get an OTP with the amount. Share your OTP, and that's it.

In the case of Zeta, you get a code in the mobile and you have to show it to the cashier. And the transaction gets done.

Each wallet has it's own way of getting payments done, and they are not difficult.

What many people do not realise is that recharging phones, DTH or even making post-paid payments or electricity bills can be done through wallets. You don't have to rush to a shop to recharge your or your friend's mobile. Or when you suddenly realise the DTH has gone blank because you haven't recharged, it takes just a few seconds to get it going again.

Transfer of money to wallets

Okay. There is no point in having an e-wallet if it is going to be constantly empty because you haven't loaded it. All wallets can be loaded through credit or debit cards or net banking. Some wallets also offer the option of auto loading.

How does auto loading work?

When you opt for auto loading option, you have to mention the minimum amount you want the wallet to maintain and the card account it has to access to get it funded. For instance, it you set the minimum amount to Rs 500, if the balance in the wallet goes down to 456, it will get recharged automatically by Rs 44, so that the balance is Rs 500. You can always add more money separately if you wish.

With wallets, you can also send or receive money. If your friend runs out of cash and also does not have enough money in his wallet, you can send her the money she has asked you. And, needless to say, it gets transferred in an instant.

Card-based wallets

What if you are not comfortable using your mobile in shops, but want to use an e-wallet (with almost all the advantages, including loading them with minimum cash)?

For such people, there are physical debit cards that are linked to your wallet. ICICI Bank's Pockets card, Udio and Zeta (in tie up with RBL Bank) act just like physical cards. You can use them to make payments anywhere - online or offline - just like you do when using a physical card. The advantage? As the card is linked to your wallet (which has just the amount you have loaded), even if you lose the card or if it is skimmed, you don't lose much.

All these cards come with a virtual version too. If you are making an online payment with the card details instead of the wallet option, there is no need for you to fish our your physical wallet to make the payment. Once you open the e-wallet, there is an option to display the virtual card.

But with some wallets like FreeCharge's Go Card (in tie-up with Yes Bank), though there is no physical card, you can use the virtual card to pay online.

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Published on November 11, 2016
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