All over the world, people use credit cards to make payments online. In India, we also use credit cards. The main difference is that we have an additional level of authentication which is the OTP (One Time Password). This means even if we have someone’s credit card we cannot use it online unless we enter an OTP to authenticate the transaction. The OTP is received as an SMS on the registered mobile number.
While this step has reduced credit card fraud significantly, it has also added another time-consuming step to the process of online purchase. This makes it more difficult and hence less convenient.
What is a Mobile Wallet?
Credit cards have two major issues. The first is that they have high limits, which mean the liability of the owner increases. The second issue is that to spend online we need to enter an OTP which make the process long and painful.
To solve both the above issues we saw the advent of the mobile wallet.
First, no additional authentication is needed to spend money. You simply have a login ID and password. Secondly, since money needs to be filled/loaded into it, the owner’s liability is only limited to that small amount.
For Example:
Credit Card vs Mobile Wallet
If you were to use Uber and select credit card as the payment method. After the trip ends, you will have to initiate the payment, then wait for the OTP, enter it, and then make the payment. All this has to be done before the next trip can be booked.
Now, for the same trip, if you were using PayTM, you would have already filled a sufficient amount into PayTM to cover a few trips (if you didn’t you wouldn’t be able to book the trip). So when the trip ends, the money is automatically transferred from PayTM to Uber. Convenient no?
Which are the most well-known ones?
- Paytm
- Amazon Pay
- Mobikwik
- Freecharge
Do I really need it?
It really depends on you and your spending habits.
If you use Uber regularly, you may find it very convenient to use PayTM.
If you use Amazon to shop then use Amazon Pay (Amazon wallet).
Mobile wallet companies have ties with various other companies and provide attractive cashback offers if you pay using them. Always check out the offers each one of them is providing.
I use all of them depending on what I’m buying and how much I can save in terms of discount or cashback.