Mobile wallets and credit cards: How do they work together?

In changing financial scenarios, mobile wallets are a new addition. You can link your credit card to a mobile wallet to avoid carrying a physical card every time you make a purchase.

What is a mobile wallet?

A mobile wallet is a digital version of your physical wallet that enables you to make expenses easily. It is an electronic wallet where you can add money for purchases. It acts as a replacement for a physical credit card, where you can make payments just with a tap.

How does a mobile wallet work?

A mobile wallet uses Near Field Communication technology (NFC) to store your card details digitally. The details are encoded, which provides added security compared to a traditional credit card. It also contains various coupons, offers and personal details of the user.

When can you use a mobile wallet?

• Mobile wallets can be easily used for online shopping.
• It can be used to book train and flight tickets
• You can transfer money from one mobile wallet to another.
• To recharge your mobile phones.
• Apart from online payments, it can also be used for offline payments.

What is the process of using a mobile wallet?

Step 1: Go to your mobile wallet website or app.

Step 2: Add your credit card information on your mobile wallet website or app.

Step 3: When you add your details, the mobile wallet entity will verify your phone number and email address.

Step 4: Whenever you make a purchase, select your mobile wallet option to make payments online.

Step 5: For offline transactions, you will have to either tap or wave your device at the NFC coded machine.

Step 6: You will be required to provide a PIN or biometric authentication to complete the transaction.

Benefits of having a mobile wallet

• Convenient to use: Mobile wallets eliminate the need for withdrawing cash from an ATM or swiping a credit card to make payments. You can make transactions instantly and conveniently as it does not require entering your card number, CVV code and expiry date every time to make a payment.
• Versatile: You can use a mobile wallet for multiple purposes, including buying tickets, transferring money, making bill payments, shopping for groceries, and buying movie tickets
• Secure transaction: A physical credit card has the possibility of getting stolen or lost. A mobile wallet cannot be stolen or lost. If you lose your phone which has your mobile wallet, your personal information will be safe due to the added security layers.

Drawbacks of using a mobile wallet

• Acceptance issues: Mobile wallets have limited acceptance as some brands or sellers may not accept it as a mode of payment.
• Internet required: Every time when you make a purchase through mobile wallets, you will require an internet connection and a charged device. In case, you do not have any one of them, you will not be able to make payments.

3. Security and privacy issues: Since the mobile wallet is technologically dependent, it is prone to cyberattacks and fraud affecting your finances. In case you observe any unusual transaction through your mobile wallet, report to your bank or credit card issuing company.

4. Fees: Certain mobile wallet companies might charge for a particular type of transaction, such as international transactions or funds transfers. It is advised to check such fees from your mobile wallet company, as they may differ from one entity to another.

In conclusion, mobile wallets may seem like the future of credit card payments in India, however, you must not be swayed by convenience and quickness to make purchases. Always be mindful of your expenses and get a mobile wallet only if you plan to make most of your purchases through it.