Digital Wallet: Benefits and Its use

I went to a local shop in for buying some items for my household.  When the time came for payment, found short of cash in my wallet. As a typical local grocery shop, it does not have any option of credit card or debit card payment. I was hesitating for a moment thinking what I should do right now. Surprisingly the shopkeeper asked ‘can you transfer me through PayTM’. I was seeing his face for a moment and speechless until he uttered again. Then I transferred the entire amount through PayTM only. And you will not believe, I went to that shop number of times after that incident and paid him through PayTM only.

In this digital age, everybody heard about PayTM, Mobikwik, Freecharge etc. for the mobile payment solution. These are called digital wallets or mobile wallets.

Digital Wallet- Benefits and Its Use
What is Digital Wallet?

A digital wallet is an instrument for doing payments recharges and transfer money electronically. You can use this for online shopping also. The wallet can be opened against a mobile number and an email id, sometimes an only mobile number is sufficient. You can use the service if you have a smartphone and internet access to the phone.

The digital wallets have become popular because it is easy to use, safe and having faster payment process. The uses of digital wallets are increasing exponentially in India and the habit of keeping leather wallets are decreasing day by day. That’s why the PayTM has now 10 million downloads in the Google Play store and it has many users in the desktop site also.

The digital wallets have become popular because it is easy to use, safe and having faster payment process. The uses of digital wallets are increasing exponentially in India and the habit of keeping leather wallets are decreasing day by day. That’s why the PayTM has now 10 million downloads in the Google Play store and it has many users in the desktop site also.

You may hear the term Unified Payment Systems (UPI) which can also be a revolutionary in the payment market. National Payment Corporation of India (NPCI), a government body has introduced this system. You can also use this method for regular payments and transfers. Also, know its features and how it can change the payment system.

Types of Digital Wallet:

There are three types of digital wallet present in India.

Closed: These types of the wallet are issued by any company and it is to be used for payments, shopping etc. for that store only. The online grocery store PepperTap (Now closed operation) had pepper cash which was a closed wallet. The money available as a form of pepper cash can be used to purchase from pepper tap only. Various online shopping portals like Flipkart, Make My Trip has closed wallet where money is returned because of product or service cancellations.

Flipkart money cannot have a balance exceeding Rs 10,000 at any point of time. You can recharge the Flipkart wallet a maximum of Rs 10,000 per month.  The transfer from that wallet is also restricted to a maximum of Rs 5000 at one time and Rs 25000 in a month. For make my trip wallet you cannot add the money directly. Only bonus and cancellations come to the MMT wallet which will be used further bookings.

Note: Due to the demonetisation issue Government has increased this limit to Rs 20,000 temporarily.

Semi-Closed: PayTM is a semi-closed wallet. Airtel Money, Mobikwik, Pay u Money are the some of the others come in this category. You can use this money, available in these wallets in other partner websites in addition to these stores for online shopping, recharges and bill payments. Semi-closed wallets cannot permit to withdraw cash. Now the question is the money in wallet earns interest? The answer is it earns and it varies from 4-6%. The money in this semi-closed wallet is managed by payment companies. As per RBI regulations, these payment companies has to open an escrow account in a bank. The interest depends on the agreements between bank and Payment Company.

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Open: These wallets can be used for the purchase of goods and services, including financial services such as insurance, mutual funds. You can do fund transfer at merchant locations or point-of-sale terminals that accept cards, and also cash withdrawals at ATMs. The issuing banks are managing the money for the open wallets. The infrastructure is managed by payment companies. The interest earned from the money is shared by both the companies as per the agreement. Vodafone m-Pesa is an open wallet with ICICI bank which enables to withdraw cash and transfer money to other mobile bank accounts.

Benefits of Digital Wallet:

Digital wallets enable you to pay your electricity bill, telephone bill, recharge of prepaid mobile, booking of bus and movie tickets etc. It is safe, easy to use and fast. You don’t have to carry your leather wallet full of credit and debit cards. Every time you don’t have to put your credit card details to every payment which is actually minimizing the risk of exposing your credit card details to every merchant.

Moreover, when you pay through these wallets you will get cash back according to the offers it runs. PayTM is not only offering recharges, bill payments, ticket booking but also online shopping from its own e-commerce store. What I most like about PayTM is its cash back and hassle free transaction procedure. Recently I have paid Rs 500 for my mobile and get Rs 70 as cash back instantly in PayTM wallet. This is just one offer I am saying. There are numbers of offers available by which you can have small small cash back while you pay bill or recharge.

You can also pay for a wide range of services other than its own store such as taxi services, grocery stores etc. through PayTM wallet. It has the link with Uber, Big Basket, Book my Show, Food Panda, Fab Furnish, Tasty Khana, Archies, Jabong, first cry, lenskart, printvenue  and many more. For the list of partners visit PayTM.com

You can also book movie ticket, flight tickets also through Paytm.

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Upgradation of Digital Wallet:

The semi-closed wallets like PayTM and Mobikwik have the option of upgrading the wallet. To upgrade the PayTM wallet, you need to fill up the KYC. After KYC is verified your PayTM wallet will be upgraded and now you can have balance up to Rs 100000. It will help you to do faster payment and processing of faster cash backs. Mobikwik has exclusive offers in store for users who upgrade their wallets. Also, you can do high-value transaction while purchasing something from an e-commerce store.

Why use Digital Wallet:

I have described the various advantages of the digital wallet. You should use services like PayTM because it is safe, secure, fast and easy. Digital wallet does not charge any transaction fee. Moreover, cash back on almost every transaction gives you extra advantage of saving money. Although the cash backs, bonuses may be closed after acquiring a large number of customers, it should be used for its large numbers of other advantages.

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Recently they have started auto recharge and paying of bills which make you hassle free of remembering the last date to pay the bill. You can also maintain the wallet balance automatically with the help of your debit and credit card. Looking at the overall benefit, I suggest you start with PayTM which is a pioneer in the digital wallet space in India.

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  • Cyclotron

    If i upgrade my wallet … Will it be a problem for me in showing this money in income tax.

    • SUMAN KUMAR GAYEN

      No, there will be no problem regarding income tax as it’s an expense.