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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.
Industry News