Types of mobile wallets

 Types of mobile wallets

The Reserve Bank of India has increased the limit for semi-closed pre-paid wallet limit to Rs 20,000 from Rs 10,000. After the ban of high-value currency, the government is taking several measures to encourage people to use electronic mode for making payments.

Now most of the individuals have shifted to mobile for making payments. There are different types of m-wallets available and they differ when it comes to payments and KYC norms.

• Prepaid payment:Pre-paid payment instruments are type of payment solutions which can be used to purchase goods and services, including funds transfer, against an amount which is stored in such instruments. The amount in pre-paid instrument can be transferred by cash, by debit, or by credit card.

• ClosedWallet: Companies such as Bookmyshow, Ola and Amazon have frequent online purchases. As such, it is convenient and more intuitive for the users to pay if the payment wallet is present on the application itself. Such wallets are called Closed Wallets. The money stored in these wallets can only be used to transact with the companies who issue them.These are usually issued by business houses or e-commerce companies, where some amount of money is locked with the merchant in case of a cancellation or return of the order.

  Closed payment instruments issued can be used to purchase goods and services from him or business. These instruments do not permit cash withdrawal or redemption. No third party payments and settlement are allowed in such instruments.

  Flipkart.com, Jabong.com, and Makemytrip.com offer closed wallets.

• Semi-Closed Wallet: Wallets like Paytm Wallet, Freecharge Wallet, Citrus, Oxygen, etc. are labelled as semi-closed wallets. These wallets, which require an RBI approval, can be used for both online and offline transactions which include buying goods and services, financial services, payment of fees, premiums, etc. Semi-closed wallets such as paytm, which do not permit cash withdrawal or redemption, but will allow you to buy products at merchants which have tied up with them and also allows to perform financial services at listed locations.

  As per RBI "these are payment instruments which can be used for the purchase of goods and services, including financial services at a group of clearly identified merchant locations/ establishments which have a specific contract with the issuer to accept the payment instruments".

  Other semi-closed wallets are Oxigen Services and Citrus Payment.

• Open Wallet: These wallets can be used to perform all the transactions of semi-closed wallets plus withdraw cash at ATMs or banks and transfer funds. M-Pesa by Vodafone and ICICI bank, Pay Zapp by HDFC Bank, etc. are few open wallets in India.Open System Payments like m-Pesa from Vodaphone, ICICI Bank can be used for purchase products, including funds transfer at any card accepting merchant locations and also permit cash withdrawal at ATMs.

KYC for mobile wallets

The RBI increased the limit to Rs 20,000 from Rs 10,000 for which minimum details of the customer is required. The outstanding amount in a wallet at any point of time should not exceed Rs 20,000 during any given month. For amounts between Rs 20,000- Rs 50,000 official valid documents should be submitted and will be issued only in electronic form. If an account is full KYC compliant, the limit on the wallet is Rs 1,00,000 and the balance should not exceed Rs 1,00,000 at any point in time.