Enter the world of digital money

Radhika Merwin  | | Updated on: Jan 23, 2018
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Here’s how to go cashless with mobile apps and e-wallets

If tech clairvoyants and futuristic movies are to be believed, paper money is on its way out. In its stead, digital money will become the preferred choice for all financial transactions in the not-too-distant future.

Supporting the digital wave is a host of new digital offerings promising ‘anytime and anywhere’ access to your money and financial information. While many of these are still in nascent stage, banks and other players in this space are investing big to go digital.

With mobile technology evolving rapidly, you can no longer ignore the power of your smartphone that can be used to pay for things or be paid in return.

So, if the technophobe inside you is holding you back from exploring the convenience of the digital world, here’s explaining what’s on offer. There’s something in it for everyone!

For the regular user

Remember the long queues at bank branches and spending hours on simple matters such as updating your passbook or requesting a new cheque book?

True, many of you may not be doing that any more thanks to the advent of ATMs and internet banking, which have helped ease access to banking products.

But all that is passé. You no longer have to search for an ATM or switch on your computer. All your banking transactions, both financial and non-financial, can be done through your smartphone. You can check your balance, transfer funds, pay utility bills, recharge your mobile, DTH connection, broadband and even book movie tickets through your bank’s mobile app. In other words, all transactions you normally do through the physical channel can be done through your mobile.

To have access to full-scale mobile banking, you need to have a smartphone. You cannot download the mobile app on your basic phone. While you can carry out banking transactions, such as checking account balance, getting a mini-statement and account statement through SMS Banking, this may be cumbersome.

For the impatient

Money transfer in the physical world, such as through deposit of cash or cheque, has long been replaced by electronic fund transfer through Real Time Gross Settlement (RTGS) or National Electronic Funds Transfer (NEFT), which are easier and quicker ways of transferring funds. But RTGS is meant for high-value transactions and NEFT is not in real time as it is processed and settled in batches.

To fill this gap, banks offer you instant transfer of money through your mobile. Immediate Payment Service (IMPS), facilitated though the National Payments Corporation of India (NPCI), offers instant, 24x7, interbank electronic fund transfer through your mobile handset.

Under IMPS, to send money to another person, you need to enter the receiver’s account number and IFSC code, or the mobile number and the Mobile Money Identifier (MMID) — a random, seven-digit number issued by banks. Under the latter, the beneficiary (whether a customer of the same bank or another bank) has to have his mobile number registered with his respective bank.

The charges for remittance through IMPS are decided by the individual banks. In most cases, though, charges are similar across NEFT and IMPS transactions, except for small transactions. For transfers up to ₹10,000, NEFT carries lower charges. IMPS also caps the transaction limit at ₹2 lakh, lower than the ₹10 lakh available through NEFT. But if it is convenience and speed you are looking for, IMPS is your go-to option.

For the socially active

Imagine you are out with your friends, at a restaurant or a movie. When it’s time to split the bill, some of you wind up being short of cash and so others in the group step up. Many of us even have running accounts of such IOUs!

But this would soon be a thing of the past with new mobile apps that allow you to transfer money to your friends through your social network.

For instance, Axis Bank’s Ping Pay is a payment solution that allows you to transfer money to other people using social and messaging channels like WhatsApp, Facebook, Twitter, e-mail and phone contact lists, no matter which bank they transact with.

These transfers happen via IMPS at the back-end. But the beauty of the app is that you do not have to enter the account number or the MMID. The back-end technology dishes out this information. All you have to do is choose a social or messaging channel and select the name of the person to whom the money is to be sent. Currently, the transaction limit is fixed at ₹50,000 a day.

HDFC Bank’s Chillr is a similar mobile app which allows you to instantly transfer money to any contact in your phonebook. Here, you select the receiver from your list of Chillr contacts, enter the amount to be transferred, and finally enter your M-PIN.

Pockets by ICICI Bank is also a similar mobile interface, through which you can send money to anyone, receive money from anyone, book movie tickets, recharge your mobile, gift physical/e-vouchers, and pay bills. With Pockets, you can transfer money to anyone’s mobile number, email, Google+ or Facebook account.

For the wary

The internet has changed the way we shop for products. But many of us still opt to pay in cash on delivery, which snuffs out a key advantage of shopping online. Security concerns prevent us from giving out credit/debit card or bank account details at every single website we shop at.

Here is where players other than banks are making a big difference. Enter digital wallets. Pre-paid Payment Instruments (PPIs), regulated and governed by the RBI, are pre-loaded with money. You can use this to buy goods and services instead of through your credit or debit cards.

So, instead of using your bank account or cards directly, you can load small sums of money into the digital wallet from your debit or credit card and then use that wallet for online purchases.

The industry classifies these instruments into three broad categories — closed, semi-closed and open.

A closed wallet is a payment instrument issued by businesses only for use in that particular establishment. The wallets you have on portals such as Flipkart, Jabong and MakeMyTrip are some examples. Other examples of closed wallets are store-specific gift vouchers and telephone calling cards. Money is not re-loadable in such instruments and cash withdrawal is not permitted.

A semi-closed wallet is generally issued by a third-party service provider. It can be used at specified establishments listed by the issuer.

You simply need to load the wallet with money and use it for purchases at the specific merchant sites or even transfer it to other accounts. Money can be reloaded on these wallets, but cash withdrawal is not permitted. Semi-closed wallets have a maximum limit of ₹10,000 at any point in time. The limit can go up to ₹1 lakh if full KYC is done.

Single, daily and monthly transaction limits vary across wallets. In India, companies such as Oxigen Services, Citrus Payment Solutions, MobiKwik and Paytm offer these wallets.

Open wallets, which can similarly be used for payments and transfers, allow cash withdrawals. But in India, there are no open wallets in the truest sense of the word. Airtel Money or M-Pesa do allow cash withdrawals but on a limited scale.

For the student

Most wallets only allow loading through a debit, credit card or internet banking. But if you are a student, chances are you do not have a bank account, let alone cards. What then?

There are some wallets that allow cash loading at specific retail points. Oxigen, for instance, has 1,30,000 retail outlets where you can deposit cash. Oxigen is also India’s first RBI-approved non-bank wallet to be integrated with NPCI allowing instant money transfer from the wallet to over 60 banks and vice versa using IMPS. Then there’s MobiKwik, whose recent tie-up with ICICI Bank enables you to load money through the bank’s branch.

You have telecom operators like Vodafone and Airtel too, who offer mobile wallets. These wallets can be used to deposit, send and receive money, pay mobile bills, make utility payments or even withdraw money at specific outlets.

M-Pesa is tied up with ICICI Bank while Airtel Money has partnered with Axis Bank.

But do take note of the charges, since they vary across players.

For the money-wise

Each wallet is tied up with specific merchants, and your choice may vary depending on the purchases you intend to make. For instance, Oxigen Wallet can be used at websites like Bookmyshow, Domino’s, IRCTC, eBay, Zapak, and Godaddy.com, among others. MobiKwik can be used in sites such as redBus, Myntra, Bata, Jabong, etc.

Paytm can be used for purchases on Makemytrip, Bookmyshow, Fab Furnish, and HomeShop18, among others, and also for availing Uber cab services.

With different wallets offering purchases across various merchants, you are no doubt flush with choices. But it also leads to a problem of plenty.

Currently in India, the regulator does not allow wallet-to-wallet transfer, which means that once you load money in, say, Oxigen, you cannot transfer the money to Paytm. So, if you want to use Uber’s cab services you have to load money in Paytm’s wallet, and in Citrus’ wallet if you decide to take a ride on Meru cabs. Thus, keeping track of your money across wallets can be onerous.

Furthermore, you may not like to let your money idle away in multiple wallets since it doesn’t earn interest.

You can then opt for players such as Oxigen, which provide the facility of money transfer to your bank account using IMPS. So, you need not worry about money getting stuck in the wallet.

But some hope may be on the horizon for money stuck in wallets. The RBI will soon issue a payments bank licence to some of the players in the prepaid cards and mobile wallets space. These new banks will be allowed to accept deposits, provide payment and remittance services through various channels and issue debit cards.

Many of the wallet providers, once granted a licence, are likely to offer interest on the money you load in the wallet. Also, some players offer benefits through loyalty programmes. MobiKwik has tied up with Payback, for instance.

For the cash-lover

So, you have a number of options to make digital payments without using your debit or credit card. But you may still prefer to pay via cash because you want to pay on delivery.

Mobile point of sale or MPOS may solve this problem soon. MPOS is the ability to carry out a card transaction through a portable mobile device rather than a fixed POS terminal. Currently, merchants need a computer connected to a card swipe machine to process payments. In MPOS, the card machine is switched out for a mobile phone, making it portable.

For a bank, the initial investment is far lower than a traditional fixed POS terminal. For you as a customer, it offers quick payments in stores and card-on-delivery for your online purchases.

Confused? Well, when your purchase is delivered to you, the delivery person will carry a mobile phone enabled with MPOS technology allowing you to make payments with your card. You wouldn’t have to enter your card details on the website.

Players who offer such solutions in India are Ezetap and Mswipe. Many banks are now tying up with these players to offer MPOS services.

State Bank of India has tied up with Ezetap while Axis Bank has tied up with Mswipe. The speed with which banks roll out these services can make a huge difference to the cash-on-delivery market in India.

Published on June 14, 2015
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