Demonetisation: India needs an official mobile wallet from the government

Ownership, promotions, payback offers, terms and conditions, and operating system availability make mobile wallets biased platforms for transactions.

The Government is releasing a steady stream of applications but has missed out on one important necessity of the citizens in the wake of the demonetisation. An official, Government sponsored mobile wallet that the people can trust and use with peace of mind.

Post demonetisation, Paytm is processing over 7 million transactions a day, worth over Rs 120 crores. Recently, the RBI temporarily relaxed the limits of Mobile Wallets from Rs 10,000 to Rs 20,000, and allowed merchants to transfer Rs 50,000 per month from wallets to their banks. The move was meant to encourage the use of mobile wallets. The Indian Mobile wallet market is on track to reach Rs 30,000 crore by 2022.

Image Credit: Paytm

A street vendor using Paytm. Image Credit: Paytm

Mobile wallets in the country, are loss making businesses as of now. The transaction fees of many wallets are reduced or void till the end of the year, or even the first few months of the next year. The businesses will have to find ways to become sustainable in the future. The question is, why should third parties benefit from the process of consumers spending their cash. Sure, they are offering convenience as a service, but why cannot the Government offer the same service.

Paytm seems to be a popular answer, but it is a company based in China. Chillr facilitates fund transfers between bank accounts directly, but supports accounts from a limited number of banks. ItzCash is privately owned and supports a hybrid phygital payment platform. FreeCharge is Mumbai based, and was acquired by Snapdeal, which is not exactly known for its stellar customer service. Telecom companies own digital wallets such as Jio Money, Airtel Money, or Vodafone M-Pesa. PayZapp and Pockets are owned by banks.

There is a problem of the security on the amounts stored in these wallets. In January this year, crores were siphoned out of SBI and Axis bank mobile wallets, according to a report in Economic Times.

Paytm and Alibaba are working together to promote cross border commerce

Paytm and Alibaba are working together to promote cross border commerce

The problem is because of the ownership structures, promotions, payback offers, terms and conditions, and operating system availability, the cash of consumers is no longer just neutral cash. Users have to make complex buying decisions in advance, and commit to a platform over a long term. For those just getting into cashless transactions, this can be a mind-boggling choice that they are being forced to make to meet their immediate requirements.

FreeCharge cashback promotion with Jabong.

FreeCharge cashback promotion with Jabong.

For those using Windows Mobile, Chillr and Lime are among the few options. If you are using PhonePe or FTcash on an Android device, and choose to switch to iOS, you will not be able to use these wallets on your new phone. There are even application specific mobile wallets, that work on their own rules. Uber supports Paytm but Ola uses its own wallet based on Zipcash called Ola Money. Cash stored in Ola Money can be used with Ola Partners including Dominoes, Pizza Hut, Cafe Coffee Day and Book My Show.

If you place your order in Swiggy, and the restaurant does not have the requested items available, then the cash is immediately refunded only in the Swiggy wallet, which can then be used to order food from the restaurants available with Swiggy. That too, there is a twenty four hour time period for "instant" refunds, and 4-6 days for a proper refund. This means that your cash is not as flexible in your mobile wallet, as much as physical cash is in your real wallet.

Mobile apps supporting UPI payments in the Play Store.

Mobile apps supporting UPI payments in the Play Store.

There are a bunch of applications supporting mobile payments through the UPI infrastructure set up by the RBI. However, these are all apps of individual banks or private companies. There is a need for a single official application that supports all types of payment mechanisms supported by banks, as well as the features available in leading mobile wallets.

The need of the hour is a safe, trustworthy, flexible, cross platform, official mobile wallet application by the Government of India. While use of the Adhaar card is not mandatory, any potential Mobile Wallet by the Government stands to benefit by being linked to Adhaar. Mobile wallets in their present form are not unprejudiced vehicles for convenient cash transfer, and if the government is pushing for a cashless economy, it should provide the products and tools needed to support such ambitious programs as well.

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