Mobile wallets have once the ruled the digital payments world. Because of their easy to use interface, they have become the most favorite and adaptable payment method for everyone.
As time passed, during the time of Demonetization, the Government has innovated a new payment method called Unified Payments Interface (UPI).
Does this new payment method become a threat to the sustainability of the mobile wallets? What will be the future of Digital or Mobile Wallets? Let’s discuss these topics further here.
Well, What Is The Problem With Mobile Wallet?
For a digital payment platform to succeed in a cash based-economy like India, it should have the three major elements, which we have given below working for it:
- Financial sustainability
- Ease of Access
All Digital Wallets loses out on interoperability, even though they score well on the aspect of ease of access.
That is, it is quite impossible to transfer money from one wallet to other. Also, to be able to use some Digital wallet apps, there are some limitations on the least amount that you need to have in your wallets. This restriction makes the user to prefer either cash or card payment over wallets.
Next, with the emergence of demonetization, the Digital Wallets market becomes overcrowded. Even though there are a large number of Digital Wallets to choose from, most of them offer little to no difference, which becomes a very weak case for Digital wallets.
The future of Digital wallets seems bleak unless the companies start adding new values to their offering.
Unlike Digital Wallets, UPI wins the aspect of interoperability. It allows instant fund transfer from one bank to another, and the money will get reflected instantly in your account.
But in the case of Digital wallets, say if you are receiving funds from someone, you will need to transfer the money to your bank accounts from the wallets. In case of UPI, you don’t need to undergo all these steps, and instead, the money is directly sent to your bank accounts.
The next greatest advantage of using UPI is that with just a single UPI Virtual Payment Address, you can send and receive money from several UPI supported banks.
So, When’s The Funeral For Digital Wallets?
Not anytime soon.
Since the UPI system isn’t as popular as Digital wallets, they still have an edge today. Also, UPI might become prone to security issues, since it allows directly sending the money to the bank account. But the money doesn’t directly reach your bank account, in the case of Digital Wallets.
Some experts argue that the death of digital wallets are inevitable, but many suggest that digital wallet will evolve to become something more. Something that enables a “frictionless” payment experience and eventually co-exists with UPI as an alternative payment method.
What do you think? Will digital wallets become extinct in the future? Share your thoughts with us using the comments section given below.