Are Mobile wallets soon to replace plastic money?

By now we have already experienced the convenience facilitated by mobile-based payment options. In order to avail the benefits of mobile banking services, it is essential to have a bank account. However, today, a revolutionary automation in commerce has resulted into introduction of ‘Mobile wallet’.

What is a Mobile wallet?

It a revolutionary service that puts the transactional choice to purchase and transfer money using mobile phones without owning a bank account. Unlike mobile banking, it does not require the user to hold a bank account. Currently, Airtel Money, Oxicash, UBI Money and SBI MobiCash are examples of companies offering mobile payment option, directly by loading cash into mobile wallets at designated outlets.

One can exercise usage of Mobile wallet through:

  • SMS: The customer can send an SMS for activation of account. The PIN received as a response to the message, along with the unique transaction ID or One Time Password (OTP) delivered through voice, can be used for carrying out the transactions.
  • Mobile Application: The customer can download Mobile wallet application which enables him to carry the step-wise transactions using his mobile phone. One can even use bar codes to undertake a transaction.
  • IVR: The customer can simply dial a number and through options laid down by IVR, he can carry out the transactions. Through DTMF inputs, he can even change his PIN as and when needed.
  • WAP and USSD: The customer can also undertake his transaction using a WAP link or USSD on his mobile phone.

It allows subscribers to convert their cell phones into virtual wallets, for utility services such as electricity bill payments, prepaid recharges, digital TV recharge, online shopping, buying movie tickets, etc. For the initial registration, the user has to pay a nominal initial registration fee along with submission of identity documents to complete the KYC procedure.


One of the major advantages of using Mobile wallet is that even when the phone is lost, the balance in the wallet cannot be misused as it involves two-factor authentication mandated by RBI. While undertaking a transaction using a bank account, there is high probability of the entire amount being prone to cyber frauds like phishing. However, such risks are eliminated in case of Mobile wallets as the risk is limited to the value loaded for a particular transaction.

The utility value for the customers who own a bank account is high as they may not have access to Internet but have their mobile phones with them all the time. Moreover, GPRS connections come at a monthly cost which is eliminated in using a Mobile wallet. On the other hand, Mobile wallets are equally beneficial for those who don’t own a bank account as their transactions are not bound by day/time constraints. All they need is to load a sufficient amount of cash and avail the benefits of transfers, payments, drop cheques etc without incurring travelling cost.

Although the hype about mobile wallet is all-time high, there is limited clarity on the cost of the service at present. The simplification of the payment process makes it more preferable, making it a clear game-changer.

Article adapted from:

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One thought on “Are Mobile wallets soon to replace plastic money?

  1. Not NFC, possibly MPOS. In the US, where many said will ignore the mobile payment system, they are on their way to accepting this change. With the launch of mPowa (, things are actually getting better for MPOS. So my answer is Yes.

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