Digital Wallet- Think Before Sign-Up

By Adv. Shivangi Zarkar

Executive Summary

On 8th November 2016 honorable prime minister of India Narendra Modi took a remarkable step by declaring demonetization of that two highest currency notes in India (500-rupee notes and 1000-rupee notes). Demonetization decision was clubbed with the government’s initiatives like Make in India and Digital India towards a cashless economy. It is expected to bring an exceptional transformation in payments and payment mode. It expected to increase inclination towards online payment. Digital wallet or E-wallet got popularity among the various modes of online payments in digitalization and demonetization. In India, where a wider part of clients or consumers still prefer Cash-On-Delivery (COD) from an e-commerce website or online shopping, it is difficult to accept innovation such as digital wallets. This article is aimed at awareness of certain norms before signing up any Digital wallets as a mode of payments, the factors encouraging, and preventing the usage of digital wallets during the post- demonetization period. This article also throws light on ancillary issues like the impact of demonetization on youth, working-class and corporates. Through this study, digital wallet users give a very high level of importance to attributes like security, privacy concerns, and pricing (Fees). The major problems frequently encountered by the respondents while using digital wallets are long transaction time is taken by digital wallets for processing the transaction, security breach, and delayed payment. The Demonetization drive of the government of India has contributed immensely towards awareness, usage, and acceptance of online payment.

Keywords: E-wallet, Demonetization, Online Payment, Smart Phone Users, Mode of Payment

Introduction

In order to know something about digital wallet, firstly one has to know about what is wallet. Wallet is something in which one can keep his/her money, important cards etc. Similarly, the case is about digital wallet or e-wallet where one can keep his money safely. Examples of digital wallets are Paytm, phonepe, freecharge, etc. Operating on e-wallet is very easy, we just have to create an account on particular digital wallet app and we can keep our money digitally in our e-wallet. Digital wallet also helps in online transactions, purchasing etc. Furthermore, it can be used for the online shopping as well. Digital wallet helps in various trans- actions such as making payments (electricity, water, fees etc.), shopping online, buying movie tickets, booking train and flight seats and many more. Digital wallet is safe to use as it reduces the complexity of carrying physical money for payment, instead the payments is done electronically which helps in promoting cashless transactions.

After the demonetization, more than 80% of currency in circulation was withdrawn. The limitation on currency circulation encouraged digital wallet start-ups as a prime cashless payment. After the demonetization decision, the number of transactions through E-wallets has increased manifold and with the transaction limit on digital wallets being increased up to Rs 20,000, it just keeps getting better. According to the government data, when demonetization was announced on November 8, 2016 -the number of daily transactions through e-wallet services such as Oxigen, Paytm, and MobiKwik has shot up from 17 lakh to 63 lakhs as on December 7, 2016 (a growth of 271%). In terms of value, the surge has been 267%, from Rs 52 crore daily to Rs 191 crore till date. (As reposted by Times of India on December 10, 2016) What is the Digital Wallet?

Think of your wallet where you physically put or pull out money as per your need or do payments with it. When you pull out money from your wallet or you run out of money, you refill it with a certain amount. The same process will be executed with the Digital Wallet. Digital wallet is an electronic device or online service which allows an individual to make electronic/digital transaction. Those transactions include online shopping, banking, bill payment, etc.

Digital Wallet Transaction Analysis:

For the month ending July 31, 2019, the no. of transactions using Prepaid Payment Instruments (which includes both digital Wallets and other PPI Cards combined) had grown by 5% to 407.6 million as compared to 389.8 million in July 2019. It went up 16% (by 55.8M) from

351.8 million in July 2018, according to data from the Reserve Bank of India. The transaction grew approx. 3.8% month from Rs 17,764 crores to Rs 18,437 crores and had grown by 5% year on year from Rs 17,519 crores. In January 2019, its peak of 443.6 million transactions, and in October 2018 up to Rs 22128 crores. The RBI doesn’t release company-specific approx. 3.8% month from Rs 17,764 crores to Rs 18,437 crores and had grown by 5% year on year from Rs 17,519 crores. In January 2019, its peak of 443.6 million transactions, and in October 2018 up to Rs 22128 crores. The RBI doesn’t release company-specific data.

Top 10 Digital Wallets in India:

Digital Wallets are growing rapidly as they help in increasing the speed of transactions, especially for e-commerce companies and all e-commerce is integrated with that.

Oxigen Wallet: It is India’s first non-banking digital wallet which started in 2004 and ap- proved by RBI. It is useful for money transfer, ticket booking, bill payments, recharge, and virtual visa.

Paytm: This is a Mobile-based Digital wallet, founded in 2010. It is one of the most popular wallets in India after demonetarization. Paytm is used to do online payments, money transfer, online shopping. This company has more than 100 million users.

PhonePe: PhonePay started in 2015, and after 4 years it got popularity with a 100 million- plus download mark. PhonePe is quite different than PayTm with cashback offers Freecharge: Freecharge started in August 2010 in Gurugram, Haryana but it has the head office in Mumbai. Freecharge is famous for online utility bills as well as mutual funds investment with EMI bases.

Mobikwik: Mobikwik is one of the fastest-growing digital wallets after demonetization. Google Pay: Google has a brand value in the international market. Google pay was formally known as Google Tez. It was transformed into a Digital wallet and named as GooglePay. It allows transferring amount via UPI bank id. All professionals mainly used GooglePay for instant money transactions. Amazon Pay: Amazon is one of the most famous and well-known e-commerce websites. Amazon serves only online clients and AmazonPay started to provide online transaction ser- vice in form of digital wallets to their customers for payment of bills and shopping. It is a bi- product of e-commerce services.

Airtel Money: Airtel is a popular mobile network in India. Airtel Money is a bi-product of Airtel to serve its customers with add-on facilities about payments.

BHIM UPI: BHIM UPI is one of the most secure digital wallets in India. It maintains security as well as privacy. It is under control of the government, so KYC details are attached with BHIM App

ICICI Pockets, YONO SBI, HDFC PayZapp are those digital wallets that are mainly custom- ized for their customers. But they are also having weightage in the Digital wallet market with their attractive schemes like no-cost EMI, Discount offer, etc.

JioMoney and M-Pesa both are digital wallets by their parent mobile companies Reliance Jio and Vodafone. They started to attract more customers as add-on facilities to mobile users.

Advantages of Digital Wallet:

  1. Easy Accessibility:

The Digital wallet is easy to access and use. It is useful for day to day transactions like bill payments. All you need to do is downloading the app on mobile and link your bank account with it. The digital wallet has a login and password, with that we can access that easily.

  • Compact and secured:

For small transactions like bill payments, online shopping, grocery bill, mobile recharge, the digital wallet is secured enough then a physical bulk wallet.

  • 24 X 7 service provision:

If anyone needs money or wants to do any certain transaction before due dates digital wallet is the best solution. The digital wallets related to services are available 24X7 for registered users.

  • A range of uses:

Digital wallet is versatile apps that provide services from bill payments of DTH, electricity, gas payments, mobile recharges, online shopping, booking rail and air tickets, ordering foods. Some of Digital Wallets like Paytm started a virtual Bank like PayTm Bank solution.

  • Discounts and Cashback offers:

Digital wallets like PayTm, Google Pay, Freecharge, or amazon Pay give discounts or vari- ous kinds of cashback offers on online transactions. It helps common people to enjoy incen- tives schemes and discounts offers.

Disadvantages of Digital Wallets:

  1. Not always accepted:

Digital Payments are not accepted by rural areas or some shopkeepers. Senior Citizens are still illiterate about digital wallets and payments. Even in metropolitan cities like Delhi, Mumbai, Chennai some shopkeeper or self-employed people don’t have faith in digital wallets

  • Internet connection issues:

All digital wallets require a fast internet connection but India is one of the most populated countries, so getting fast internet connections is the biggest issue.

  • Supported by certain Phone:

India has the biggest market for smartphone import. But all digital wallets are not compatible with all smartphones.

  • Payments bind to your mobile:

Digital wallets consume the maximum battery of mobile. A battery drain is an issue during online payment. Loss of mobile can create an issue with digital payment

  • Cyber-crimes threats:

After digitalization, cyber-crimes have been increased. So white-collar criminals like hackers are the threats during payment through digital wallets.

Crimes related to Digital Wallet:

1) Digital wallet hacking

2) Digital wallets being used to steal money without trace

3) Phone-based method of Siphoning money

4) Debit / Credit card fraud with Digital wallets

5) Poor detection of cyber-crimes and criminals

6) Digital wallet skimming

Laws related to Digital wallet:

India lacks laws to protect consumers/clients if they lose money during digital transactions. RBI rules the digital wallets. The first time, the regulatory framework for digital wallets is provided in the “Master Direction on Issuance and Operation of Prepaid Payment Instruments”, which was first issued by the RBI in 2009 by virtue of Section 18 read with Section 10(2) of the Payment and Settlement Systems Act, 2007. The guidelines of 2009, permitted the non-bank entities to issue semi-closed instruments.

Following some laws/acts apply on Digital Wallet:

  1. Information technology Act, 2000
  2. Payment and Settlement Systems Act, 2007
  3. FitTech Laws
  4. Cyber Laws

Mandatory Precaution:

Smartphones are vulnerable medium to cyber-attacks and easy place of cyber-crimes. There- fore, a digital wallet on your mobile requires more safety measures.

  • Password Safety:

Keep your password different than your email id. Use difficult number combination or bio- metric (If available) as a password. It is safer to protect by password safe from Google Playstore or app stores. Some password manager apps are the following- LastPass, Dash- Lane, TrueKey, and KeePassX.

  • Use App Locks:

Every time change your digital wallet passwords. Always use the sign-out/ log out after the use of a digital wallet.

  • Install Anti-virus and Anti-malware:

Use Anti-virus and Anti-malware software to protect KYC details, banking details, or debit/ credit card details from hackers.

  • Do Safe Payment:

Do not share OTP or UPI passwords with anyone. Do secure payment with OTP and pass- word.

  • No direct Apps download:

Do not download any app directly from websites; there is a temptation for android users to download different games or apps. Always use a secure source and try to find details about any app.

  • Enable two factors authentication:

RBI mandates two-factor authentication. If you receive any such texts, SMS, email, or other notifications without you’re trying to log in; you must immediately notify the bank.

  • Wipe data if the phone gets stolen:

In today’s world, losing your phone is like losing your precious wallet/ money. If you lose a phone, then immediately launch a complaint and wipe data.

  • Read the fine print

It is mandatory to go through the end-user agreement provided with an app to understand the type of information you would be sharing with the software provider, developer, and other

third-parties. Carefully read instructions about the type of transactions, restrictions on pay- ment limits, who the app developer will share your information with, etc. before installing and using any app including digital wallet applications. This way you can reduce cyber

threats.

How to file the complaint ombudsman?

If your complaint has not been satisfactorily handled by the digital wallet service provider’s grievance redressal system, you can file a complaint with the ombudsman under whose juris- diction the service provider’s office is located. In the case of centralized operations, your

billing address will determine the relevant ombudsman office. Complaints can file easily to the complaint online— the email IDs of the ombudsman.

Conclusion and Suggestion:

This article has focused on the Digital wallet current scenario and precautions related to that. Digital wallets started from Oxigen wallet since 2004 but all digital wallets came in fame and popularity from 2016 after demonetization. After digitalization, Digital India started 4200+ start-up apps, which somewhere, somehow joined with the Internet. Those apps mainly joined with digital wallets and payment gateways. Our economy is growing fast but cyber- crimes, white-collar crimes rate also increasing with growth. RBI has no special strict guide- lines or regulations for Digital Wallets. Newly launched FinTech Law is coming forward but still no special tribunal for cyber-crimes for small amount transactions like rs.500-Rs5000. Information Technology Act, 2000 is getting weaken in front of today’s cyber-crimes. ‘Precaution is better than cure’ is thumb rule while dealing with the digital wallets. Young kids and senior Citizens are hot targets for cybercriminals. Indian Government and Indian Legal System should amend the Information Technology Act and Evidence Act.

Leave a Reply