The usage of both UPI and E-Wallet can be attributed to the fact that being a digital platform they have made transfer of money from one person to another quite an easy job. UPI and E-Wallet is growing in the fintech industry. Sooner or later, do not be surprise if coins and paper money production will be stopped when people start to find cashless money is much more efficient and relevant.
UPI is an initiative taken by Reserve Bank of India’s National Payment Corporation of India (NPCI) whereas e-wallet is an initiative taken by private companies, followed by banks. However, can the initiative taken by the government of launching UPI will replace e-wallets?
UPI is an initiative taken by Reserve Bank of India’s National Payment Corporation of India (NPCI) whereas e-wallet is an initiative taken by private companies, followed by banks. However, can the initiative taken by the government of launching UPI will replace e-wallets?
E-Wallet
Mobile wallets or e-Wallets are digital instruments where you can store money for instant payments. You load money from your bank account via credit or debit cards or net banking. Most wallets are semi-closed wallets, for instance, you can transfer money to people who have the same wallet, or make payments at merchants who are authorized to accept from that particular instrument.
Mobile wallets or e-Wallets are digital instruments where you can store money for instant payments. You load money from your bank account via credit or debit cards or net banking. Most wallets are semi-closed wallets, for instance, you can transfer money to people who have the same wallet, or make payments at merchants who are authorized to accept from that particular instrument.
The advantages of using E-Wallet are you can pay bills using online also, visiting individual biller’s website, and paying using cards or from the account. In this, you have to enter your password or card number every time to make the transaction. In case of e-wallet, you can do a one-click payment for a repeat transaction. For the first transaction, you will have to go through the registration process, but not every time. Also, depending on the tie-up that e-wallets have with merchants, you may be able to make payments to multiple billers from one platform.
E-wallet providers have started offering e-commerce platforms in their app itself. For example, MOLWallet app by MOLPay Sdn Bhd, where you can visit e-commerce website such as Amazon. This app allows you to make payments using the in-built wallet. This saves you from having to open multiple e-commerce websites or apps to shop. Shopping can be done easily with the innovation of E-Wallet.
Many companies offer coupons, cash backs and gift cards to encourage the usage of e-Wallet. These are some of the loyalty programs that e-Wallet offer. When you make a transaction, the cash back comes to you in the e-wallet, which you can then use for your next transaction. Then there are e-wallet companies that allow you to redeem the points from your cards, which is otherwise at times a cumbersome process.
Now, let’s look at the drawbacks of using e-Wallet. First and foremost, security will always be the top issue for e-Wallet. Questions like “Is it safe to use e-Wallet?” and “Will number of digital pick pockets increase?” This is the hurdle that companies must face and as a result, must develop security systems that are as safe and full proof as possible to avoid potential security issues. Companies must make sure that their customers' information is encrypted and well protected.
E-Wallet depends on mobile devices. What if the device got lost? What will happen to the digital wallet? As you know the digital wallets can only be used online and via your devices like laptop, smartphone or tablet, so the use of e-Wallet is highly dependent on your device. If anyhow you are unable to reach your smartphone or laptop such as due to battery problem of any other reason, like it got lost, digital wallets are of no use. This is the main reason why digital wallets can’t beat credit and debit cards.
Unified Payment Interface (UPI)
Basically, UPI and e-Wallet are quite similar to each other.
Nonetheless, the pros of using UPI are the cheapest method of fund transfer. Because of this low cost, UPI has the potential to promote the non-cash transactions of small amounts.
On top of that, UPI makes us free from cash and makes small transactions feasible. The smooth and low cost transaction had made it feasible for small shopkeeper and consumer as well. Once you start using the UPI, you need fewer visits to the automated teller machine (ATM).
By using UPI, you do not have to give your personal details. Most of us avoid using online transaction and card payment because it will ask for our bank account details and personal information. For card transaction, you give card number, validity period and CVV number. Whereas net banking transaction exposes your bank account details. For this reason, the card and online payment is not as much popular. People still prefer cash. But the UPI solves this problem. The payment through the UPI does not require the card details or bank account details. You have to only give the virtual payment address (VPA). The virtual payment address is similar to our email ID.
The drawback is, the UPI is too new to the society and operate in India for the moment. The UPI rollout started in the end of August 2016 and some companies are still running “alpha” tests. Most users are not aware of who else uses UPI and it has suffered from a lack of direction.
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