5 myths about mobile wallets

Physical wallets have given way to digital wallets, which are being used for ticket booking, bill payments, online recharges and retail purchases.

What is a Digital Wallet?

Mobile applications that store your payment information (Credit card and debit card details).

  • Advantage- no need to give your confidential bank account or credit card details at every purchase anymore.

  • Examples- Paytm, Mobikwik, and Freecharge and other bank wallet apps.

Myths Related To The Use Of Digital Wallets-

1) No need to fill any KYC norms.

  • Truth-Fund transfer restricted to Rs.10,000 for non-verified customers.

  • Verified customers can transact up to Rs.1 lakh.

2) No cash return, once money loaded

Myth-Funds locked up cannot be reimbursed in case of returned goods.

  • Could be true for closed wallets. But open wallets have tie ups with banks. These open wallets have cash out services too.

  • Closed wallets are exclusive or prepaid wallet which can be used at a particular outlet of the service provider.

  • Examples of closed wallets-Myntra, Flipkart, Airtel Money or Idea Money.

3) Fear of security issues and leak of confidential data

Heavy investments being made in security technologies.


-Companies working on facial recognition technologies to reduce fraud.

-Many have introduced card and device checks to detect fraud.

-Some capture the IP address and device location for fraud detection.

4) Less usable because of limited listed merchants linked

Rapid expansion plans. Examples-

-Companies like Paytm have over 1 lakh merchants listed with them.

-Mobikwik added 10,000 offline merchants, including neighborhood restaurants, shops, bookstores etc.

-Some tying up with neighborhood kirana stores, flower shops, clothing stores.

5) Earning interest from my money lying in the wallet account

Truth-RBI has issued complete set of rules for payments through mobile wallet.

For example,

A customer registers with Paytm Paytm creates an escrow account Preloaded amount deposited in this account.

After payment is made Fund credited to Paytm account.