How Do Companies Make Money From Mobile Payment Apps
In India, banks, conglomerates, telcos and financial technology (fintech) companies offer e-wallets. While banks are allowed to offer open wallets, others such as telcos and fintech companies tin can offer only semi-airtight wallets and need to have a prepaid payment instrument licence. Open e-wallets allow to exercise a cash withdrawal whereas semi-closed wallets don't.
Till recently, e-wallets didn't exist in our daily transaction infinite. Simply that's changing. "E-wallet is a financial payment product and has a 18-carat place in the financial system," said Saurabh Tripathi, partner and director, Boston Consulting Group.
Have you wondered why these wallets exist and what problem they solve?
"The wallets are trying to solve the problem that fiscal institutions haven't for customers—that of convenience and ease of transaction. E-wallets are here to replace physical wallets in your pockets. E-wallet providers' aim should be to convert at to the lowest degree one of everyday cash transactions into a digital transaction. But bill payments or recharges are not daily transactions. Hence, wallet providers are trying to crack different apply cases to get a share of the cash pie," said Vivek Belgavi, partner—fiscal services (fintech and technology consulting leader), PwC.
Mint Money takes you through the various kinds of e-wallets that are in the market, and their uses.
Pecker payments
Pick any e-wallet and the one characteristic that each of them will take is pecker payments and recharge for mobile phones and DTH television service. But why do all digital wallets offer this service?
"Firstly, it is a hook to get customers to use the wallet. Since mobile bill payment and recharges are recurring expenses, wallet providers find information technology easier to get consumers to use their wallets for these. One time a customer starts using the wallet, the company hopes that she volition start using its other features too," Belgavi said. Most of the engagement for the app companies comes from pecker payment and recharges lone.
Y'all tin can pay bills using online also, visiting individual biller's website, and paying using cards or from the account. In this, yous have to enter your password or menu number every time to brand the transaction. In case of e-wallet, you can do a 1-click payment for a echo transaction. For the get-go transaction, you will have to go through the registration process, just non every time.
As well, depending on the necktie-up that e-wallets have with merchants, you may be able to brand payments to multiple billers from one platform.
For case, about e-wallet providers let you lot to book film tickets, coach tickets, air tickets or hotels, pay electricity bill, gas bill, school fee, insurance premium, for DTH and metro cards using their due east-wallet app platform. Hence, it becomes convenient for you lot to pay recurring bills and make small-ticket purchases only if you pick an e-wallet that has multiple billers and booking options.
Shopping
Say, you lot desire to buy a pair of shoes from an e-commerce website. Commonly, you would visit the private website, scroll through the options, choose what you similar, add the product to the cart and checkout using payment options such as Net cyberbanking or card payment.
At present, e-wallet providers have started offering due east-commerce platforms in their app itself. 1 instance of this is Axis Bank's Lime digital wallet app, where yous tin visit multiple eastward-commerce websites such as Flipkart and Amazon. And then, you only have to open the Lime app since information technology aggregates multiple e-commerce websites on one platform.
Similarly, Paytm allows you to store from its wallet app. But unlike Lime, which aggregates multiple e-commerce websites, Paytm has its own e-commerce market place where y'all tin shop. Both these apps allow you to make payments using the in-built wallet. This saves you lot from having to open multiple e-commerce websites or apps to shop.
An eastward-wallet provider that aggregates e-commerce websites on one platform also usually gives boosted information such as price trend of the product and additional offers if you want to pay using the east-wallet. However, at times, your options may be limited because all e-commerce sites may not be available on that wallet, and you lot may accept to still visit those websites individually.
Loyalty programmes
In lodge to encourage usage of due east-wallets, many companies offering coupons, cash backs and souvenir cards. When y'all make a transaction, the cashback comes to you lot in the e-wallet, which you can and so use for your next transaction. So there are e-wallet companies that allow you to redeem the points from your cards, which is otherwise at times a cumbersome procedure.
"Say, you earn points on a item bank's card. Yous will be able to redeem those in the east-wallet and use those points against your next transaction through the eastward-wallet. Also, customers tend to use our wallet more when we offering these advantage points. We are going to extend this to all nationalised depository financial institution cards too," said Bipin Preet Singh, co-founder and chief executive officer, MobiKwik Systems Pvt. Ltd.
Generally, e-wallet companies that offer cash backs and discounts have tie-ups with merchant or cashback companies. This is essentially a marketing tool which is applied to incentivise customers to utilize the e-wallet, so use information technology more frequently.
Since e-wallets are yet a new product and are trying to discover their basis in the digital payment segment, to encourage customers to use their platform, cash backs, coupons and other such offers are likely to continue till e-wallet usage increases.
Grocery and food
Most e-wallet providers are at present creating a network for offline transactions likewise. Currently, the focus is to include as many merchants equally possible in the digital money space and empower them to take money on mobile. Every bit part of the strategy, due east-wallet providers have partnered with offline stores—large format ones as well as mom-and-pop stores. "Later on the e-wallet providers included travel, e-commerce and billing, the online infinite got saturated for them. At present, the biggest hurdle or the tipping point will be to go people to utilise wallets offline," said Belgavi. Which is why financial services companies, banks and fintech firms are trying to build an ecosystem to bring minor merchant in the digital payment ambit. "Increasingly, eastward-wallet companies are looking to add together mom-and-pop stores to increase credence of e-wallet payment," said Vijay Mani, senior managing director, Deloitte Haskins and Sells LLP.
Though the calibration is small-scale, there are offline stores where eastward-wallets tin can be used. For example, Big Bazaar accepts payments through eastward-wallet.
And to encourage offline payments, new technologies such as nigh-field communication (NFC) and quick response (QR) codes are now being used. Still, it is yet besides early to say how this innovations volition play out as every merchant and customer has different payment needs.
Seeking acquirement
For every transaction you lot do in your e-wallet, the company gets a commission. For instance, every fourth dimension you recharge a service, the eastward-wallet provider earns 1.5-ii% of the transaction amount as commission. Similarly, every time y'all make a bill payment, the wallet provider earns a flat fee of, say, ten. In example y'all employ at an e-commerce platform, the e-wallet company earns 1.75-2% of the transaction amount as commission. This is similar to the interchange fee a card issuing company earns from a merchant. In example of a retail in-store transaction, say, at a grocery store, the wallet provider can earn effectually one.25% of the transaction. The commissions here are lower than for card transactions in social club to encourage merchant to accept wallets. The fee can vary depending on the agreement between e-wallet provider and merchant.
The incentive y'all become as cashback or coupon is a marketing tool, either for the merchant or the wallet company, depending on the agreement.
Apart from all this, e-wallet companies are able to earn an interest of v.5-6%, depending on the understanding with the bank, on the coin that you lot leave in an e-wallet.
Mint Money have
At present, the e-wallet segment is still evolving, so every bit a consumer you can expect more than changes and innovations. For instance, the next stage for the wallet companies, after payments, will exist providing small-scale credit and data mining. They will focus on data analytics and data mining for targeted marketing, which would be a revenue model. "Besides the transaction fee that they earn, e-wallet providers also get access to consumers and their data, which they volition effigy out a way to monetise in the future," said Mani. Remember every transaction you make using an e-wallet leaves backside a digital footprint.
Avoid putting in more money than is needed since coin put into an due east-wallet is usually locked into it (yous tin can't transfer it back into your account, or apply for a payment that is not supported by that e-wallet, unless it is an open wallet offered by banks).
Also, in that location is a possibility of some glitches as most of the e-wallet providers are all the same trying out new technologies.
iv new ways to make wallet payments
CONTACTLESS PAYMENT
How it works: This is possible with well-nigh-field advice (NFC) engineering. You can wave your smartphone near an NFC-enabled terminal and the payment goes through. To employ this, both the merchant point of sale (PoS) terminal and your phone should take the technology. If your telephone doesn't have, some e-wallet companies use stickers that yous tin stick to your phone and tap it on an NFC-enable PoS car.
Good: Quick payment
Bad: Works simply for small-ticket purchases; NFC technology mandatory
LOCATING A STORE
How it works: The east-wallet app volition use GPS on your smartphone and locate a store almost you lot that accepts wallet payments. This comes handy as not all stores have e-wallet acceptance infrastructure. Likewise locating a nearby store that accepts wallets, it will too alert you of offers available if you pay using an e-wallet. It volition also show outlets nearby where you can load cash in the due east-wallet.
Good: Machine alerts
Bad: Express merchant outlets accept wallets.
VIRTUAL CARDS PAYMENT
How information technology works: Some e-wallet providers allow you to create a virtual menu with the coin in the wallet. The 'bill of fare' is unremarkably in partnership with Visa or MasterCard. The virtual menu will have a xvi-digit card number, expiry date and CVV number like whatever other credit or debit carte and y'all can employ information technology on any online platform. To get this card you demand to practise a one-time registration. Some apps automatically generate a virtual card as soon as you load the coin.
Skillful: No demand of plastic; wider acceptance
Bad: Y'all can utilise information technology only online
USING QR CODE
How it works? A QR (quick response) code is a machine-readable bar code that has details of the product you buy. You have to scan the code with your smartphone's photographic camera to brand a payment. Just beginning you lot will have to log in to the app that allows you to scan the QR code. Banks too every bit fintech companies offering this payment procedure.
Adept: Faster way of making payment
Bad: Limited acceptability
Source: https://www.livemint.com/Money/HB1P5i9JJ1xGzOjHMB8J6H/Tweaks-in-ewallets-how-you-benefit.html
Posted by: ortegawhatife1996.blogspot.com
0 Response to "How Do Companies Make Money From Mobile Payment Apps"
Post a Comment