UPI or e-wallets: Which one should you choose?

Indians planning to go cashless are a confused lot as they have to choose from internet banking, credit and debit cards, e-wallets, Unified Payments Interface (UPI), Unstructured Supplementary Service Data, etc. With free space on the smart phones being limited, it is tough to choose which banking app (application) or wallet to download onto your mobile phone.

Selecting the right app or technology should be easier if you looked at your end goals: easy to use; safe and secure; inter-operability of the app; costs of transaction and interest earned, if any.

From the convenience point of view, most customers prefer using technologies and applications that allow for one click banking.

“Net banking is considered a bit clunky in that it needs a login and a password and is not very suitable for the mobile phone, it is felt by a section of the people,” say industry sources.

“E-wallets and UPI are at par when it comes to enabling one click transactions,” says Sunil Kulkarni deputy managing director, Oxigen.

When it comes to safety and security, net banking, credit and debit cards and UPI are more secure than e-wallets. “While credit cards and debit cards standards are compliant to globally recognized PCI standards, there are no international standards for wallets,” says Ramaswamy Venkatachalam, managing director, India and South Asia, FIS.Kulkarni points out that with e-wallets, the advantage is that they are mainly used for low-value transactions. “The risk is limited to that extent, unlike a bank account where your entire money is at risk,” says Kulkarni.

“UPI is the next generation of payment solutions. Wallets are redundant technology,” says Ashutosh Kumar, regional head & MD, transaction banking – India and South Asia, Standard Chartered. UPI provides the convenience of e-wallets with additional security as it works on a single click 2 factor authentication. In order to ensure privacy of customer’s data, there is no account number mapper anywhere other than the customer’s own bank. “Thus, the customer has a virtual payment address that allows the customer to freely share the financial address with others,” says Kumar.

The other advantage of UPI is that since the money is held in your bank account, it continues to earn interest unlike money held in e-wallets. “Besides, e-wallets charge you for transferring money from wallets into banks, anything from 1-4%,” says Kumar.

Another disadvantage of e-wallets is that they are not interoperable. “There are a variety of wallets in the market, each tying up with their own set of merchants. This means a user may have to install multiple wallets in order to become truly cashless,” says Venkatachalam.

Here UPI scores as it has the ability to link all bank accounts of the individual,” says Kumar. UPI allows customers to have multiple virtual addresses for multiple accounts in various banks. “Individuals can choose to tag multiple bank accounts to a single virtual payment address,” says Kumar.

“The interoperability of wallets is a regulatory issue and not a technology problem,” points out Kulkarni.

Besides, this is all set to change in case of some e-wallets. “Interoperability will be a non-issue, as Oxigen Wallet application also creates Virtual Visa Card which is accepted on any eCommerce site or mCommerce applications. In physical retail, it is launching by early January 2017 universal QR code solution that will accept Oxigen Wallet, Visa/MasterCard/RuPay QR code as a single QR code solution”.

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