One of the most common discussions that you must’ve heard these days is the one pertaining to a ‘cashless economy’. In simple words, a cashless economy is an economy where the use of cash is minimal.
Digital transactions comprise of most of the transactions and instruments such as credit and debit cards are extremely common.
But today, it is not the debit or credit cards which have become popular. With the advent of smartphones, there has been a great increase in the number of users of digital mobile wallets, which now could be found as an app in every smartphone device.
This technology has revolutionized the concept of cashless economy and has the potential to give it a whole new paradigm.
What is a Mobile Wallet?
Imagine you have a wallet, which you carry around in your pocket with money in it. You use it whenever you have to pay for something. You just take out your wallet from your pocket, take money from it and give it to the person whom you have to pay.
This is what a normal wallet is. It is what we have been using for many years. Now, think about a wallet which is not visible physically. Rather, this wallet is inside your phone, and it holds some of the money in a digital format.
As far as digital wallets go, one needs to add money into them from time to time. Most of these wallets can be used to add your own payment details in them, such as your bank details, your UPI information, Credit and Debit cards, etc.
Today, there are a lot of different mobile wallets in the market. Wallets such as PayTm, PhonePe, MobiKwik, FreeCharge etc are extremely popular among the general public in India.
The general public, which has access to smartphones more than ever has accepted them and their use is now quite common amongst every class of people.
Their use is today much more than just for payments to others. One can say that they have truly revolutionized the digital payments industry and have contributed a lot to the future of a cashless economy.
How Does a Mobile Wallet Work?
To answer this question, let us first throw some light on the working of your conventional wallet. How does it work? Firstly, you need to own a wallet and put some of your money on it.
After that, whenever you are doing a transaction, you take out the money from your wallet which you had out in it and hand it over to the person with whom the transaction is taking place.
That completes a conventional cash transaction. You might see that in this type of transactions the role of the conventional wallet is extremely minimal.
So much so, that you could completely do away with the wallet and it won’t affect the nature of the transaction at all.
Now, in the case of a digital mobile wallet transaction, the exchange of money will take place, but here, you must know that your wallet is everything.
If you do not have a mobile wallet, then you will not be able to do a digital transaction. The working of a mobile wallet is quite simple. When two people are looking to transact using a mobile wallet, both parties need to have the same mobile wallet, for ex- PayTm.
To use the wallet, you must have a smartphone with an internet connection on it. You must also have an account on the particular wallet(in case of PayTm, a KYC completed account).
After that, if you are looking to pay the other party for something, then you will have to add money to your mobile wallet. To add money, you must either link your mobile wallet to your bank account from which you can directly add money.
Or you can also use your debit or credit card to add money. These days, UPI technology can also be used to add money to your digital mobile wallet. Just click on the ‘Add Money’ option in your mobile wallet and all the options will appear.
After you have added the money, the transaction is extremely similar to a traditional one. Once the money is added, all you need to do is to tap on Pay/Send Money and enter the mobile number of the person you have to pay the money or scan their unique code.
After that, the mobile wallet system will ask you to enter the amount and to confirm if you want to send the person the designated amount or not.
Tap on confirm and thee transaction is done. After the transaction is done, your mobile wallet will get debited by the amount you have paid and the person who received the money will have his wallet credited. You will also get a text message for the same.
This is how mobile wallets work. They are extremely easy to use and very handy. They are the future of money and monetary transactions. Hope you have a better idea about mobile wallets now. I personally prefer Phonepe as my phone wallet of choice.
Related read: 8 Best Personal Loan Apps in India for Instant Cash
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