A digital/mobile wallet defeats the very purpose of money, and hence, it is not going to work in India, states Manish Patel, Founder and CEO of mobile point of sale (mPoS) company Mswipe.

E-wallet companies will further face serious challenges when mobile payment and digital wallet services such as Android Pay, Apple Pay and Samsung Pay become prevalent, he said in an interview with e27, soon after the company’s US$25 million Series C round from Falcon Edge Capital, Axis Bank, DSG Consumer Partners and others.

Not a big fan of e-wallet

“If you ask me, honestly all the limelight in India has been hogged by e-wallets. But I am not a big fan. It is not going to work in India because almost 60 per cent here are the banked population,” he says, in an apparent reference to Paytm, a leading mobile wallet-cum-m-commerce company in India. Paytm is backed by the likes of Chinese e-commerce giant Alibaba Group and SAIF Partners.

MobiKwik is another VC-funded mobile wallet company in India.

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“Even at a global level, (the) digital wallet has not taken off yet, despite huge mobile phone penetration. It is because e-wallet defeats the very purpose of money. It may work in markets such as Africa where majority of the population is underbanked. Digital wallet makes sense for them because they use it for P2P transactions,” he observes.

What is Mswipe?

Mswipe is a Mumbai-based merchant acquirer and mobile PoS solutions provider. It launched its first PoS solution in 2012 with a card reader, which could be attached to any mobile phone’s audio (headset) jack. Building on its product innovation strength, it launched the first EMV Chip and Pin compliant mobile PoS solution, Wisepad, in December 2013. In June the next year, Mswipe rolled out Wisepos, an Android phone which can be used for card payments.

Currently, Mswipe has 30,000 offline and online merchants in India using its services that include leading e-commerce players such as Myntra, Flipkart and Jabong. It also has merchant partners across Sri Lanka, Pakistan, South Africa, UAE and US.

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E-wallet adds nothing to currency

Patel further adds that a user doesn’t achieve anything by using e-wallet. In his view, a wallet is something which one can carry with him/her and has money in it and that can be used 24×7 without any questions being asked. “If you are going to a store to purchase a product and tell them that you have a wallet which has some cash in it, will they accept it?” Patel asks.

Mobile wallet, in his opinion, is used for a very narrow purpose — to recharge mobile phones, DTH, etc.

“How does a user recharge his wallet? Is the money automatically coming into his wallet? Of course, not. It is coming from his own debit card. If you can use a debit card directly for transactions, why the h**k (would) you move your money into a wallet?” he quips.

The woes of e-wallet

He also observes that e-wallet is more expensive from a merchant’s point of view and so it is not acceptable everywhere. Already you have the cost of the card transfer, and then the company facilitating the service will want something over and above these charges. So it is not a viable option for the user.

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To add to the woes of mobile wallet companies, mobile payment and digital wallet services such as Android Pay and Apple Pay are coming to mainstream in the next 24-36 months. What they do is they provide a secure way to put your debit/credit cards directly to your mobile phone. So you don’t need to transfer your money into the wallet and make a payment.

“Besides these, there are lots of security issues when putting money or card into a wallet. Additionally, everyone will have a biometric-enabled smartphone in his hand. Then you wouldn’t mind putting your card straight into your phone, bypassing the wallet completely,” Patel shares.

Cards are here to stay

In his view, the wallet in the current avatar is a very transitional product. “If one has some money, say five per cent of his salary, in his bank account at the end of every month which earns him some interest, why should he move the money into a wallet which earns nothing?” he asks again.

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Patel also feels that over a period of time, cards will start collapsing into the mobile phone. “A card is only an identity of who you are. It will start collapsing into your mobile phone soon. Anyway, I don’t think the card will become obsolete in the near future,” he concludes.

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