Going Cashless with eWallets and UPI. The Evolution has just begun!

In the wake of the cash crisis which is feared to be India’s worst cash crunch ever, refusing to embrace technology or ignoring cashless options like the eWallet and the UPI is not quite the right thing to do. Sure, the cashless way also has its downsides. But its benefits far outweigh them. Adapting yourself to the available cashless payment systems and their design increases the possibilities of a consumer-friendly experience, eventually easing it out for you during this testing time.

The Smart Phone revolution has transformed the way payments are made and has led to the sprouting of many digital payment options.  They come as a welcome break from the traditional way of making payments through the bank’s website or with a debit/ credit card, which is often time-consuming and cumbersome.

Payments made using the debit or credit card online also posed security threats. While it was continuously improved for better security, the whole experience wasn’t a user-friendly one.Now, post the Demonetization drive, e-ways of making payment have exploded is size and magnitude serving the user just in time.  Here’s a quick round up about E-wallets and Unified Payment Interface.

eWallets

Cashless

So what about them? It is an application on your smart phone that gives you the facility of linking multiple credit cards and bank accounts. The user needs to authorize this storage once at the time of installation. Every time a transaction is made the money is deducted from the eWallet.  This eliminates the need to enter your account information or credentials every time you want to make a payment. eWallet transactions also happen in a very secured environment. All that the user has to do is to keep his eWallet replenished with the cash needed to perform the transaction.

eWallet Examples : Airtel Money, Ola Money, PayTM, Freecharge, Mobikwik, HDFC PayZapp, are among the many other apps available in the market today.

While PayTM, Freecharge and Mobikwik are startup applications, which were begun to facilitate mobile bill payments they eventually expanded to accommodate other types of payments too. After the demonetization drive they grew leaps and bounds bringing under their gamut a whole range of merchant types right from grocery to travel. They are now full-fledged eWallets.

Companies like Airtel and Ola developed the eWallet app to help their core business functions (Airtel payment for mobile and landline bills and Ola payment when we use the taxi service.) The effect of demonetization has them transforming these payment gateways into eWallets roping in merchants who would accept payments from these digital wallets.

Banks are also not behind in this race of pushing their customers go cashless. Utility bill payments, train and bus ticket booking, retail and payment recharges are a few things that can be done with the eWallet apps of the bank.  This connection between the bank and the product/service provider is getting bigger and better after the introduction of the payment bank license by the government. (Payment banks are banks that have a licence to open only savings and current accounts with a max deposit limit of one lac per customer. These banks will not be able to issue loans or credit cards)

eWallets can have a maximum deposit limit of 20,000/- (revised from the 10,000/- before demonetization). This limit can be increased to 1 lac for customers who have submitted their KYC or Know Your Customer documents along with a valid identity. The biggest USP of a eWallet is the convenience offered when it comes to making payments.

 Unified Payment Interface…

The banking industry may have ample products like the NEFT (National Electronic Funds Transfer), RTGS (Real Time Gross Settlement), IMPS (Immediate Payment Service) cheques, demand drafts, net banking and mobile banking. But this wasn’t serving the purpose as people wanted easier and convenient ways of making payments or transferring money and that is why we see the eWallets taking over.

The Unified Payment Interface is an app on the user’s mobile phone. Developed by a group of banks or a coalition of banks it is a new payment platform that allows the user to make payments through the mobile phone right from their bank account. We can say that it is the enhanced version of the Immediate Payment Service offered by the National Payment Corporation of India and its member banks.

Unlike the eWallet where the user has to load money or replenish the eWallet with cash periodically or as and how cash depletes, the UPI functions just like a shell or front-end giving the user direct access to the bank account. 1 lac of transaction per day is the ceiling for transactions done through the UPI app. However, the UPI is yet to take off in a big way as the merchant ecosystem remains largely unlinked and the app is used mostly for peer transactions, which is the transfer of funds to other bank accounts; friends and family.

Although there has been a steep rise in the use of eWallets and the UPI app, it is still limited to the segment that is smart phone savvy; the segment that is able to afford or has access to the internet. And yet this sect is also in need of hard cash too as payments of smaller denominations or the last minute rush to the grocery store or vegetable stall makes them think more than twice about the amount of cash they have at hand. While technology is evolving at a rapid pace and trying to cater to a variety of payments in a number of ways, we still have a long way to going completely cashless and there is every possible that chance that in a country like India it could forever remain a myth. Talk to advisors and experts today who will help you structure your payments and cash.

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One thought on “Going Cashless with eWallets and UPI. The Evolution has just begun!

  1. KVP

    UPI is a good option. Unfortunately, most traders are not ready to adopt it. Government should make it mandatory for all TIN holders to have UPI ID and put it in their invoices.

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