1. e-wallet

2. Till about a decade ago, we stood in long queues to withdraw cash from a bank and then waited painfully in other queues to pay our utility bills. With the advent of credit and debit cards many of our cash related problems got simpler. The internet allowed us to pay bills at the click of a button.

3. e-wallet Today there is a big buzz around ‘e-wallet’ and talk of the death of cash payment. Now it is possible to leave your wallet at home and get through a typical day with the help of a digital wallet, thanks to the revolutionary technologies we are seeing as we advance to a cashless world.

4. What is an e-wallet? e-wallet

5. E-wallet or digital wallet is an online prepaid account where one can store money, to be used when required.

6. e-wallet As it is a pre-loaded facility, consumers can buy a range of products from airline tickets to grocery; make payments to retailers, transfer money to other accounts and many other things without swiping a debit or credit card. These e-wallets can be loaded with cash through a mobile payment provider, online banking or through telecom operators.

7. e-wallet When e-wallet is used with mobile it’s called Mobile Wallet. It is a virtual wallet which is like a prepaid account of a mobile phone. Several companies, especially those in the e-commerce and telecommunication services sector, have introduced e-wallets

8. Types of e-wallets

9. Let us see the formula of the Current Account Balance (CAB) CAB = X - M + NI + NCT X = Exports of goods and services M = Imports of goods and services NI = Net income abroad [Salaries paid or received, credit / debit of income from FII & FDI etc. ] NCT = Net current transfers [Workers' Remittances (unilateral), Donations, Aids & Grants, Official, Assistance and Pensions etc] CURRENT ACCOUNT DEFICIT Broadly, there are three kinds of e-wallets. e-wallet

10. CLOSED WALLET: A closed wallet is one that is issued by a company to a consumer for buying goods and services exclusively from that company. These instruments do not permit cash withdrawal. Several online shopping portals offer such closed wallets. It is basically an account where money gets credited in case of a refund due to cancellation or return. Flipkart, Jabong and MakeMyTrip are some examples.

11. e-wallet SEMI-CLOSED WALLET: A semi-closed wallet can be used for goods and services, including financial services, at select merchant locations or establishments that have a contract with the issuing company to accept these payment instruments. Semi- closed wallets do not permit cash withdrawal or redemption by the holder as well. Oxigen Services, Citrus Payment Solutions, MobiKwik and Paytm offer these wallets.

12. e-wallet OPEN WALLET: Such wallets can be used for purchase of goods and services, including financial services such as funds transfer at merchant locations or point-of- sale terminals that accept cards, and also cash withdrawals at automated teller machines (ATMs). These kinds of wallet can only be issued by banks. An example of open wallet is M-pesa by Vodafone India Ltd in partnership with ICICI Bank Ltd.

13. What are the benefits?

14. e-wallet  Easy to get started.  Ease of use without having to enter your debit/credit card details for every online transaction.  For some sites there is no minimum amount and you can deposit a small amount.  You can pass on the benefits of your e-wallet to your friends and family as well.  There is no chance of a decline of payment since e-wallet is a prepaid account.

15. What are the risks? e-wallet

16.  Revealed passwords can lead to theft. However, transacting through these digital wallets is usually secured.  Closed & Semi-closed wallets usually do not provide the facility of refund; the amount is only redeemable against a purchase.

17. What happens to the money stored in your wallet? e-wallet

18. Treatment of money stored in these payment options depends on the type of wallet.

19. e-wallet Here is a quick grid for your understanding. Closed WalletSemi-Closed WalletOpen Wallet Where the money goes? To the company’s accountTo escrow accountTo bank account What happens to the money? The company earns interest on it till the customer uses the money to make a purchase There is either no interest earned or interest is earned based on the average balance calculation approved by RBI It earns interest, which is shared between the payment service provider and the bank depending on the agreement Note: Currently the money in your e-Wallet doesn’t earn interest.

20. e-wallet In India, where people have more mobile phones than bank accounts, mobile wallets are the future of cash. This also means the physical wallet is one step closer to becoming redundant. So brace for a cashless world as we accelerate towards becoming a digital nation.

21. Let us see the formula of the Current Account Balance (CAB) CAB = X - M + NI + NCT X = Exports of goods and services M = Imports of goods and services NI = Net income abroad [Salaries paid or received, credit / debit of income from FII & FDI etc. ] NCT = Net current transfers [Workers' Remittances (unilateral), Donations, Aids & Grants, Official, Assistance and Pensions etc] CURRENT ACCOUNT DEFICIT Hope you have understood the concept of ‘e-wallet’. e-wallet

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