Since the last year’s demonetization in India, mobile wallets and such applications/software have become a hot topic. One million new users have already registered for mobile wallets, whose popularity is increasingly gaining ground today. From November, 2016, the private player, PayTM saw a sudden rise in usage and stepped ahead of public/government sector UPI (Unified Payment Interface). However it is reported that a new better version of UPI will be available in 2017 with an aim to capture larger user base.
UPI (Unified Payment Interface)
UPI is basically a payment system which allows the users to transfer money/ funds from their account to some other account with the help of a smart-phone. In this system, users can pay directly from their accounts to other users/ recipients. For this, one needs to download the concerned UPI app and then register under it. This will be followed by setting up a new Virtual Payment Address (VPA) and an M-PIN.
The M-PIN eliminates the problem of typing card credentials, account number, passwords, etc. all what is required to do is enter the VPA of the recipient along with your M-PIN and the funds will be sent in seconds.
Features of UPI
- Unified Payment Interface allows users to transfer an amount up to Rs one lakh.
- One can add multiple bank accounts on a single platform which essentially means that users need not use different bank applications for payment/ receipt of funds. Thus, UPI saves a lot of time and makes the process quite smooth.
- UPI works 24/7 on real-time basis, that too, 365 days a year which allows users to enjoy facilities anytime anywhere.
- It has allowed different banks to build interface of their own in order to facilitate customers or to have an edge over others. It works under open architecture platform.
- Although banks need to pay charges to NPCI for Unified Payment Interface but as of now, the UPI services are kept free for customers by the bank.
Mobile wallets help you do all the things your physical wallet allows, but in an electronic way. With mobile wallets, you can store your money in a safe manner and avoid the problem of handling cash. Amount can be transferred to other wallets too but of same service provider. There are some limitations of mobile wallets like money cannot be sent to other service provider’s wallet, transfer of more than Rs 20,000 cannot be made etc.
Features of Mobile Wallets
- The user can link her/her credit card/debit card to the wallet and transfer funds into it.
- The user can save his/her card detail such as PIN, card number etc, so that for future use, these credentials need not be entered all over again. Thus, a transfer can be made without any hassles.
- Problem of handling cash is taken care of.
- The mobile wallets have become a mode of payment at most of the product/service providers’ right from food, shopping to making important bill payments.
- Some wallets may provide other services like split bills and cash pick up/ deposit facilities.
To conclude, it can be said that both UPI and mobile wallets have distinct usage and features which help running the economy in a better way. To compare, UPI is found beneficial as upper limit of transaction is higher, transaction cost is less and interest income is not sacrificed as amount is not stored in wallet but is fetched directly from account. In some ways mobile wallets make an edge over UPI like it offers cash-back and discounts, and have wide customer acceptability.