The advantages of e-wallets in India is directly proportional to the acceptability at the merchant’s side.
There are many advantages of using e-wallets. You don’t need to carry the exact change. The exact amount of the value of the purchase can be transferred to the merchant without worrying about change. The merchant’s e-wallet is linked to his phone number. Many merchants display a QR code that helps identify the payee, lest you type in an incorrect phone number and the wrong person gets paid. e-Wallet companies also incentivise with help of cash backs. A small cashback acts like a reward for making the transaction. There are various promo codes setup, so the chances of winning increase as transactions increase. Innovation is being driven big time by the companies.
However, there are a variety of wallets in the market, each tying up with their own set of merchants. This means a user may have to install multiple wallets in order to become truly cashless. The wallets are not interoperable and it affects the way people use wallets.
There are many things that we take for granted while operating an e-wallet. The mobile phone needs to be with the user, battery sufficiently charged and the mobile network should be available. An absence of this infrastructure will render the wallet useless to make the transaction.
The data in the digital wallets contains your personal information including your credit card information, and could be hacked.
While credit-cards and debit-cards standards are compliant to globally recognised PCI standards, there are no international standards for wallets. The wallet company cannot use any global best practice and has to invest in their own security research.
For adding money to the wallet, one needs to have access to a bank account, credit card or debit card. Current mechanisms do not exist where one can transfer physical money to a wallet.
Safety of digital payments : Recently Qualcomm, a US-based semiconductor and telecom-equipment company claimed all Indian wallets do not use hardware-based security layer. This makes them prone to software attacks and hacks. According to them, some of the international wallet companies such as AliPay and ApplePay have already started using the hardware-baed security features.
There may be suspicious apps that look exactly like the real wallets. The user needs to be careful while installing the official wallet in his mobile phone. These apps also release newer versions when vulnerabilities are detected. One should ensure that these apps get updated at regular intervals.
Numerous freeware apps tend to drop breadcrumbs on the mobile phones. These codes can take control of the phones or pass confidential information to unknown entities. These apps can read SMS as well so a hacker can get access to the banks’ one time password (OTP) at any point in time.
One should be wary about who is around when they are operating the mobile phone. Strangers can shoulder surf and figure out the user passwords. Mobile phones with fingerprint scanners are safer. If one does not have a fingerprint scanner, they can install third party password apps for additional security. enough and can’t be guessed easily.
Using reliable networks: One should not use public wifi that is unencrypted. It is better to refrain from using an untrusted network. A phone’s data connection is trustworthy compared to public wi-fi networks.
Using remote wipe feature: In the worst case, when one loses the phone; personal details will be out in the open and can be compromised. One needs to setup a remote wipe feature that can erase the data completely and remotely rendering the mobile useless, if need be.
What should a customer keep in mind while choosing a payment method?
The merchant being paid- Is the online merchant going to hold personal or credit card information? There are online international shopping companies setup that ship to India. The only way one can pay for these companies is to use a credit card or debit card. However,these sites store credit card information and card details are at risk. In case of any issues, it will be difficult to bring the culprits to book. Therefore, one should refrain from buying from such sites. Also one should not use cards in flea markets while travelling abroad. You can never know when the card gets skimmed. Cards should only be used with reputed and trustworthy merchants. One can also use prepaid cards while travelling abroad, which restricts the amount of money that is loaded on these cards- thereby reducing risk. Use your digital wallet like your physical wallet. You don’t need to add large funds to the e-wallet in one go. If you receive a large sum through an ewallet, transfer the money to your bank.
PROS AND CONS
- The exact amount of the value of the purchase can be transferred to the merchant without worrying about change. e-Wallet companies also incentivise with cash backs
- User may have to install many wallets in order to become cashless. Wallets are not interoperable and can affect way of usage
The writer is managing director, India and South Asia, FIS