E-wal­lets can now be used as pre­paid cards

Mint ST - - PERSONAL FINANCE - BY VIVINA VISH­WANATHAN vivina.v@livemint.com

Last month, the Re­serve Bank of In­dia is­sued e-wal­let guide­lines, in­di­cat­ing that you will have to face higher com­pli­ance stan­dards if you want to con­tinue us­ing e-wal­lets. As per the guide­lines, e-wal­lets could soon be­come in­ter­op­er­a­ble too. Cur­rently, you can­not do a trans­ac­tion be­tween, say, Paytm and Mo­bik­wik e-wal­lets. Sim­i­larly, not all e-wal­lets are ac­cepted at all mer­chant out­lets and e-com­merce sites.

This hap­pens be­cause typ­i­cally, on­line or off­line mer­chants ac­cept e-wal­let trans­ac­tion only af­ter sign­ing exclusive tie-ups with an e-wal­let com­pany. That can some­what re­strict their wider us­age. To make e-wal­lets ac­cept­able on a larger scale, e-wal­let com­pa­nies have now started of­fer­ing vir­tual pre­paid cards on apps for their cus­tomers.

THE OF­FER­ING

To in­crease the trans­ac­tions, e-wal­let com­pa­nies are look­ing for op­tions that let their cus­tomers use the money ly­ing in their e-wal­lets at mul­ti­ple plat­forms. The eas­i­est way to do this is of­fer their cus­tomers a pre­paid card that runs on a Visa or Mastercard plat­form. Al­most all on­line mer­chants ac­cept Visa- and Mastercard-en­abled cards. Since e-wal­let com­pa­nies can’t in­de­pen­dently of­fer Visa or Mastercard pre­paid cards, they have to part­ner with banks for this. As per reg­u­la­tions, only banks can is­sue these cards. Cur­rently, banks such as RBL Bank Ltd and IDFC Bank Ltd are pro­vid­ing pre­paid cards linked to The Mo­bile Wal­let and Mo­bik­wik e-wal­lets, re­spec­tively. As of now, e-com­merce com­pa­nies such as Flip­kart and Ama­zon do not ac­cept pay­ments from other e-wal­lets such as Paytm and Mo­bik­wik. Us­ing these pre­paid cards, you will be able to trans­act on these plat­forms us­ing the money held in your e-wal­let.

HOW IT WORKS

Pre­paid cards for e-wal­lets, which usu­ally run on Visa or Mastercard plat­form, are is­sued by part­ner banks. These cards are sim­i­lar to debit cards: have a 16-digit unique num­ber along with an ex­piry date and a CVV num­ber.

How­ever, pre­paid cards of most e-wal­lets are vir­tual cards. You can gen­er­ate it from your e-wal­let app and it will stay inside the app. Some e-wal­lets have started is­su­ing phys­i­cal pre­paid cards too. Like any debit card, this card will also come with a per­sonal iden­ti­fi­ca­tion num­ber (PIN).

To make an on­line pay­ment us­ing your vir­tual pre­paid card, you have to go to the debit card pay­ment op­tion on the web­site where you want to do a trans­ac­tion, en­ter the 16-digit card num­ber, ex­piry date, CVV num­ber and your PIN. Af­ter these steps, your trans­ac­tion will be com­plete.

You can use these cards wher­ever Visa or Mastercard are ac­cepted. The card’s trans­ac­tion limit is the same as your e-wal­let, as the card is a replica of your e-wal­let. This ser­vice is pro­vided free of charge and can only be used for do­mes­tic trans­ac­tions.

BEN­E­FITS FOR YOU

If you were not able to use your e-wal­let at an e-com­merce web­site, a vir­tual or phys­i­cal pre­paid card linked to your e-wal­let will help over­come that bar­rier. This fa­cil­ity is also use­ful for those who don’t want to ex­pose their bank ac­count while do­ing on­line trans­ac­tions. But in a sense, through this process, e-wal­let com­pa­nies are go­ing back to the days of card trans­ac­tions.

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