Mobile Wallet? A Comparison – Part 1
Posted on: January 13, 2017. Comments ( 1 )

Author: Devashish Pradhan, parent of Kidzee World, Kharghar, Navi Mumbai

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What is Mobile Wallet?

In general, the term “mobile wallet” referred to “digital wallet,” or “wallet passes” or “wallet card” or “mobile wallet passes”.

A mobile wallet is a container where any financial services can be virtually kept. Your mobile phone can securely connect to all of your bank accounts, seamlessly managing your coupons, credit cards, loans, and money transfer.

Think of it as the digital equivalent of all daily things included in a physical wallet—coupons, business cards, tickets, credit cards and more. And, mobile wallets are rarely forgotten because they are stored on the consumer’s smart phone.

They are also very effective and efficient for a business because a wallet can be easily created, managed and updated, allowing a business to significantly reduce the cost of a traditional (physical) card program by 10 to 25 times.

Types of a mobile wallet—

There are four types of mobile wallets in India

  • Open: Open wallets are the ones that allow you to buy goods and services, withdraw cash at ATMs or banks, and transfer funds. These services can only be jointly launched with a bank. M-Pesa by Vodafone and ICICI is one such example. Apart from the usual merchant payments, it also allows you to send money to any mobile number linked to a bank account.
  • Semi-Open: AirTel Money is a semi-open wallet, which allows you to transact with merchants that have a contract with AirTel. You can’t withdraw cash or get it back. You’ll have to spend what you load.
  • Semi-Closed: Wallets like PayTM, do not permit cash withdrawal or redemption, but allow you to buy goods and services at listed merchants, and perform financial services at listed locations.
  • Closed: These are quite popular with e-commerce companies, where a certain amount of money is locked with the merchant in case of a cancellation or return of the order or gift cards.

Technically, what is a mobile wallet?

  • Is a software component that allows a user to make an electronic payment with a financial instrument and hides the low-level details of executing the payment protocol that is used to make the payment.
  • Allows a user to make an electronic payment with a financial instrument (such as a credit card or digital cash), and hides the low-level details of executing the payment protocol that is used to make the payment.
  • Authenticates the consumer through the use of digital certificates or other encryption methods, stores and transfers value, and secure the payment process from the consumer to the merchant.
  • Can hold other than payments like Bank account details, Credit cards, Gift coupons and reward certificates, Loyalty cards Offers.

What are the features of a mobile wallet?

✔ Simple and quick to download and register. (Mobile App is Free)

✔ Offers quick recharge and payment of utility bills and retail merchandise from website.

✔ Avail discounts while shopping, say using coupons codes. These are delivered to your email id or mobile wallet.

✔ Discounts and cash backs can also be availed using promo codes.

✔ In case of refunds, the refund amount is credited to your mobile wallet, which can be used later for other payments.

How does the mobile wallet work?

  1. Your smartphone carefully encrypts your account information (notably NOT your bank, card or other payment information), which the POS (Point of Sale, or simply the retail outlet in which you buy goods) then reads through Near-Field Communication (NFC).
  2. NFC is technology that enables devices to establish a radio communication with each other when they are within the required distance.
  3. The POS does not read the information. Rather, it first sends it to the mobile wallet provider, who decrypts the information, identifies which account you’re looking to access, and checks your identifying information.
  4. Once the provider has satisfactorily proven you are who you say you are, they send along your card information to your payment processor who is the one to actually access your bank information and request that your bank send the money back to them.
  5. The payment processor then deposits the final bill amount to the store’s bank and alerts the POS that the transaction has been completed.

Continued in next part…

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Comments (1)


    Piush Agarwal says:

    Very informative article in this phase of digital money and demonetization.

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