The Wallet Conundrum
This is a big confusion for me nowadays, especially because everyone seems to be coming up with a wallet.
As you know, the stifling regulation of the RBI has led to the creation of a completely new industry of prepaid wallets. What one needs to do is add some money to a prepaid wallet and then use it at some merchant online.
My question is quite simple here, why would I want to use your wallet service when I could keep my money in my bank and/or credit card?
These wallets claim to have some benefits like
- If you have a failed transaction, refunds in wallets are super quick whereas refunds in bank may take up to 7 working days.
- These wallets offer some sort of discounts and cashbacks. If you spend 10 bucks from your card directly, you don’t get any discount, but if you spend 10 bucks from your wallet, you may get 1 buck off.
- Some wallets claim speed like ‘Recharge done in less than 10 seconds’. Now, if it weren’t for RBI regulation that has kept Indian e-commerce in the ancient age, credit/debit card payments would also take ‘Less than 10 seconds’.
- ‘Buyer Protection’ is a big buzzword that is thrown around, what is this magical protection that these people offer that is not offered by VISA, MasterCard or anyone else at your bank? God only knows.
Now seems to me that these wallets just copied the PayPal model, the only thing is, they woke up around 15 years late.
There is one problem that is glaring and nobody seems to be talking about it.
There is a Paytm wallet, a Mobikwik wallet, a Ram wallet and a Sham wallet, even BookMyShow has a wallet. Now, I want to put a question to all you geniuses that have come up with a wallet, what the hell do you expect your customers to use? Which wallet should they use? If they go to wallet A, money is stuck there, if they go to wallet B, money is stuck there and most people are only opening accounts with multiple wallets because of the discounts.
Some wallets are even offering money transfers, which means that you can send money to a friend through the wallet. What if your friend doesn’t have Paytm, will they also transfer to Mobikwik? They probably won’t because it’s outside their system and they don’t gain anything by giving them business.
A bank to bank transfer is possible, a wallet to wallet transfer is not. When dealing with money, banks have bank grade security and complete Know Your Customer(KYC) documentation, do wallets do that as well? I don’t think so.
People say there is a startup bubble that’s going to burst, I don’t know about that, but I’m sure that there is a wallet bubble that is definitely going to burst, especially considering all the money that’s flowing into it.