Importance of e-wallet in India

What Is An E-Wallet?

An a e-wallet in India  is a form of digital wallet that allows users to store money electronically for carrying out online transactions. e-wallets work through apps on mobile phones which are linked to the user’s bank account or debit/credit cards. 

Users can load money into their e-wallet from their bank account or debit card and then use that balance to pay for goods and services online, pay bills, recharge mobiles, send money to others and more.

Impact of E-Wallet On The Indian Economy

According to Techsci Research, there are 217 million e-wallet users in India, and this number is expected to grow at a CAGR of 23.9% between 2023 and 2027. Over 50% of digital transactions are now happening through e-wallets.

One of the most significant impacts of e-wallets on the Indian economy is the reduction in cash usage. Traditionally, India has been a cash-heavy economy, but by decreasing the reliance on cash, e-wallets contribute to reducing the informal economy, curbing tax evasion, and increasing transparency in financial transactions.

Types Of E-Wallets

There are different types of e-wallets available in India based on ownership and functionality:

1) Closed E-Wallets: 

Closed e-wallets are linked only to a specific merchant or platform. Funds can be used for transactions and payments only on that particular platform. The funds have no independent utility and cash withdrawals are not allowed, making them a closed loop system.

2) Semi closed E-Wallets:

Semi closed e-wallets allow fund loading from bank accounts and making payments to merchants. However, the funds can only be used to make payments to select merchants on their designated platforms. This cannot be transferred back to bank accounts, providing a semi closed digital wallet system to the users.

3) Open E-Wallets: 

Open e-wallets are not linked to any specific bank account and can be used to store funds from any source. Users can deposit and withdraw money in these e-wallets without restriction and use the stored amount to perform digital payments for purchases and money transfers to any person through the e-wallet.

Importance Of E-Wallet In India:

1. Convenience and Speed

With e-wallets, users no longer need to carry cash or cards with them. All they need is their mobile phone to pay. e-wallet transactions are almost instantaneous. Money can be transferred from one e-wallet to another or used to pay merchants within a matter of seconds. This brings immense speed to digital payments. 

Users no longer have to wait at counters or for cards to be authorised during checkout. The convenience and speed of e-wallet transactions benefit both customers and merchants.

2. Advanced Security

e-wallets provide advanced security for financial transactions by using encryption technologies. All the sensitive information like debit/credit card details and net banking credentials, is securely stored in the e-wallet. The data is encrypted using secure algorithms so that it remains hidden and tamper-proof. 

Unauthorised access is not possible as an additional layer of security like OTP or biometric authentication, is required for each transaction. This protects users from online fraud like phishing and identity theft. The encryption ensures transaction security even if the e-wallet app or website is compromised.

3. Increases Sales and Customer Loyalty

Customers can make payments for their purchases instantly through e-wallets. This convenience provided by e-wallets encourages impulse buying among customers. This makes customers prefer certain e-wallets and merchants over others.

Merchants can process high volumes of sales through e-wallets, thereby increasing their revenues. All of this helps merchants in retaining existing customers and attracting new ones.

4. Anytime Anywhere

The major advantage of e-wallets is that they allow users to make payments from anywhere and at any time. They just need their mobile phone to be able to pay for things. Whether one is at home, travelling, or out for work, e-wallets can be used to pay bills, shop online, transfer money, and more.

The digital and mobile nature of e-wallets has removed geographical barriers and allows payments 24/7 with just a few taps on the mobile screen. This provides a high level of comfortability as users are not restricted by time or location to complete transactions. 

5. Cashback and Rewards

e-wallets offer various cashback schemes and discounts to users on online payments. Users can avail of cashback by paying for various online services like booking movie tickets, paying utility bills, shopping online etc. using their e-wallet. 

Some e-wallets provide a certain percentage of payment amount as cashback while others offer vouchers or coupons that can be redeemed for future purchases. e-wallets also partner with merchants to offer discounts during festivals or sales. This makes digital payments more rewarding for users.

6. Financial Inclusion 

A large section of the Indian population does not have access to formal banking channels. They either do not have bank accounts or the banks are located far away. e-wallets bridge this gap as they can be accessed easily through mobile phones. 

People can open e-wallet accounts without any paperwork or minimum balance requirements. This brings the unbanked population into the formal financial system and gives them access to digital payment options. Thus playing a big role in furthering the government’s agenda of financial inclusion.

How NTT DATA Payment Services India Simplifies E-Wallet Services

NTT DATA Payment Services India offers a complete payment solution to advance both your offline and online businesses. From online payment gateway and mPOS to IVR payments and Bharat QR Scan and Pay, we ensure convenience and safety for all your expenses.

We created a unified digital platform that allows customers to use any e-wallet of their choice. Our payment services are backed by advanced security protocols, ensuring that all transactions are encrypted and protected against fraud. Our platform is highly scalable, allowing businesses of all sizes to enhance their payment capabilities.

Conclusion

The importance of e-wallets in India is undeniable as the country continues its journey towards a digital economy. E-wallets have emerged as the preferred mode of digital payments in India on the back of their convenience, safety, and widespread acceptance. NTT Data Payment Gateway has further enhanced the digital payment landscape by offering secure and efficient transaction solutions. E-wallets have also played a significant role in promoting financial inclusion, reducing cash dependency, and driving economic growth.

FAQs

1) What is an e-wallet?

An e-wallet is a digital wallet that allows users to store money electronically for carrying out online transactions through a mobile app linked to their bank account or debit/credit cards.

2) How do e-wallets work?

e-wallets work through mobile apps which are linked to the user’s bank account or debit/credit cards. Users can load money from these sources into their e-wallet and use the balance to pay for goods, services, bills etc. online.

3) What are the different types of e-wallets?

The main types are closed, semi-closed and open e-wallets based on usage restrictions and fund transfer capabilities.

4) What is the importance of e-wallets for customers?

Key benefits include convenience, speed, advanced security, cashbacks & rewards, ability to pay anytime anywhere.

5) How do e-wallets promote financial inclusion?

They enable digital payments for unbanked individuals through easy account opening on mobile phones, allowing them to access financial services without formal banking.