How Mobile Wallets are Changing the Way We Pay (2024)

Home » Personal Finance » Mobile Wallets in India: Google Pay, PhonePe, Paytm, and More

The trend of online payments seems to have changed the very system of making payments. What’s our favourite one nowadays? Google Pay, right? The most-loved mobile wallet is also used by street vendors and hawkers nowadays. Gone are the days of carrying money in pockets because mobile wallets are here. But how does a mobile wallet make sending or receiving money possible with just a few taps on your phone? How can you enjoy discounts, cashback, and rewards for using your mobile device as a wallet?

Let’s find out!

What is a Mobile Wallet and How Does it Work?

A mobile wallet is a digital wallet that stores information from a debit card, a credit card, coupons, or reward cards on a mobile device.

A mobile wallet lets you carry cash digitally. Instead of using a physical card, you can pay with your smartphone, tablet, or smartwatch. You need to link your account to the digital wallet to add money. Many banks and private companies offer e-wallets. Thiese are Paytm, Freecharge, and Mobikwik, SBI Buddy, itz Cash, Vodafone M-Pesa, SpeedPay, mRuppee, Airtel Money, Jio Money, etc.

Digital wallets have several uses:

Storing preferred payment details for online purchases

Transferring funds between accounts

Making payments through a mobile wallet

Mobile Wallets in India

India is one of the fastest-growing markets for mobile wallets in the world. According to Statista, Paytm, PhonePe, and Google Pay are all predicted to extend to hundreds of millions of users in India; come 2025.

Also, payments are expected to grow at a CAGR of 23.9% between 2023 and 2027.

The growth of mobile wallets in India is driven by several factors, such as:

• The government’s push for digital payments and financial inclusion.

• Rise of smartphone penetration and internet connectivity, especially in rural areas.

• The availability of low-cost and user-friendly mobile wallet apps, such as Paytm, PhonePe, Google Pay, and others.

• The rise of the Unified Payments Interface (UPI).

Types of Mobile Wallets

There are three main types of mobile wallets in India, based on the functionality and regulatory framework:

Open Wallets

These are mobile wallets that are issued by banks or non-bank entities in partnership with banks. You can make payments to any merchant that accepts the wallet. You can also transfer money to other wallets/ bank accounts.

Examples of open wallets are Paytm, PhonePe, Google Pay, and MobiKwik.

Semi-closed Wallets

These are mobile wallets that are issued by non-bank entities with the approval of the Reserve Bank of India (RBI).

You can add money to these via your bank accounts.

They do not allow cash withdrawals or redemption. Examples of semi-closed wallets are Amazon Pay, Ola Money, and Freecharge.

Closed Wallets

These are mobile wallets that are issued by specific merchants or service providers for their own customers.

It lets you store money in the wallet and make payments only to the issuing merchant or service provider. They do not allow cash withdrawals, redemption, or transfer to other wallets or bank accounts.

Examples of closed wallets are Flipkart Wallet, BookMyShow Wallet, and MakeMyTrip Wallet.

Objectives of Mobile Wallets

The main objectives of mobile wallets are:

• To provide a convenient, fast, and secure way of making payments using mobile devices.

• To reduce the dependency on cash and physical cards, which are prone to theft, loss, or damage.

• To increase the financial inclusion and digital literacy of the unbanked and underbanked population, especially in rural areas.

• To enable seamless and interoperable transactions between different mobile wallets and bank accounts using UPI.

• To offer value-added services, such as rewards, discounts, cashback, and financial products, to users and merchants.

Benefits of Using a Mobile Wallet

Mobile wallet offers multiple advantages:

• They offer touch-free transactions, reducing the need to touch public surfaces when making payments.
• Unlike traditional cards, mobile wallets transmit encrypted data. This minimises the risk of skimming and fraud.
• With these digital wallets, payments are typically faster than using chip readers. This offers a seamless transaction experience.
• Mobile wallets eliminate the need to carry physical cards. It is convenient for on-the-go transactions and provides easy access. You can also store multiple cards digitally.

Mobile Wallets Examples

Some of the most popular and widely used digital wallets in India are:

• Paytm

Paytm is India’s largest mobile wallet provider. It offers a range of services, such as mobile recharge, bill payments, ticket booking, online shopping, money transfer, insurance, loans, and more.

It also operates Paytm Payments Bank, which offers savings accounts, debit cards, and UPI services.

• PhonePe

PhonePe is a leading mobile wallet and UPI app.

It offers various services such as mobile recharge, bill payments, ticket booking, online shopping, money transfer, insurance, mutual funds, and more.

It also operates PhonePe Switch, which allows users to access over 200 apps within the PhonePe app.

• Google Pay

Google Pay is a mobile wallet and UPI app.

It offers multiple services such as mobile recharge, bill payments, ticket booking, online shopping, money transfer, and more.

• MobiKwik

MobiKwik offers services such as mobile recharge, bill payments, ticket booking, online shopping, money transfer, insurance, loans, and more.

It also operates MobiKwik Zip, which provides instant credit to users.

Conclusion

In the journey towards a digital economy, mobile wallets stand as pillars of convenience and security. They are not just tools for transaction; they represent the evolution of payment systems. They are the source to drive India towards a future where financial empowerment is accessible to all.

Embrace the change, go digital, go cashless.

FAQs

Source- cashlessindia.gov.in

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