The Curious Case of Wallets in India

The more I use wallets such as PayTM, PayU, Mobikwick etc. the more I wonder if they have eased the way I make payments or have they complicated it more. Come to think of it, I have to keep adding money to my wallet, and remember to pay it when the bill for my credit card, which was used to add money to the wallet, is due. So basically I have added another step in my payment process. Some might argue that these wallets have made it easier to transfer money to merchants who don’t have the bandwidth to use VISA, American Express etc. and hence digital money can now be used at these merchants. And I agree with that statement BUT what if tomorrow all these credit card platforms wake up and realize that a plastic card is really an obsolete thing and that they should try and move to a digital / smartphone based platform which makes it very easy for even a small merchant to use, these wallet companies will fall on their face because their true value add is now gone.

Let me drill this down further to make it more convenient to understand. Assume that VISA comes out with an app in which you can add all your visa card details. So say you have an ICICI VISA debit card and a Standard Chartered VISA credit card and you fill in your details or maybe you get virtual VISA cards from these service providers. The merchants also don’t need a dumb instrument like a swipe machine, which runs on an even more dumb telephone line (archaic). All he needs is a smartphone with a data connection and a VISA merchant app. The customer and merchant interaction can happen through various ways – QR code, NFC etc. etc. Actually the merchant doesn’t need a smartphone as well. Just a printed QR code for his establishment should do the trick, as whenever a transaction happens, he will receive a message on his feature phone confirming the transaction. The customer on the other hand will get to choose which card (out of the digital VISA cards he has in that app) he wants to use for that particular transaction. The 2 factor authentication can easily be applied to this way of making payments.

And then ofcourse there is potential of a single app which works similar to the UPI platform RBI has introduced which can store all your mastercards, Visa, Amex, Maestro and RuPay. This app will truly be a digital wallet and not an additional piggi bank, but a reflection of your credit and debit cards. One can hold wallet accounts (PayTM, PayU etc.) also in this Digital Wallet and make transactions from them wherever they are offering discounts. An additional feature could be that when the customer is trying to make a payment, the app suggests which card to use depending on offers running with the cards available with the customer.

-- Himanshu Makhijani