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Payment Apps and e-Wallets

Payment Apps or mobile wallet refers to the payment services operated under financial regulation and is performed using a mobile device. The concept of paying using cash, cheque, debit or credit card is off lately becoming outdated. The new payment mechanism which involves payment for a transaction using the mobile wallet or mobile money transfer is gaining momentum.

The concept of mobile payment is gradually being accepted and adopted across the globe in different ways. The exclusive first patent defined as ‘Mobile Payment System’ was filed way back in the year 2000. In some of the developing countries, the mobile payment mechanism is being used as a means of extending financial services to those people who are known as underbanked or unbanked and it is estimated that they constitute close to 50% of the global adult population, as per the reports from Financial Access of 2009 - ‘Half the World is Unbanked’. They are mostly used for micropayments.

How does a Payment App Work?

Money can be deposited in the payment app before conducting any transaction or in other cases, an individual’s bank account can be linked with the digital wallet to conduct the financial transaction.

Payment apps will have both the software and information component in it. Secure and fair electronic payment systems form an important issue. The software helps in providing security and encryption for personal information and for conducting the actual transaction.

Types of Mobile Payments

There are five different types of models for mobile payments and they are

  • Card-based payments
  • Mobile Wallets
  • Contactless Payments NFC (Near Field Communication)
  • Carrier Billing (Premium SMS or direct carrier billing)
  • Direct transfers between the payer and payee bank accounts on real-time based operations

Payment App NFC

For the last few years, Near Field Communication (NFC) payment applications have been gaining more attention with considerable popularity. This revolutionary payment system has gained enormous fame across the country. Innovation in NFC payment encryption transforms your mobile into a safe and easy way to pay. NFC is a short-range wireless networking technology that enables data sharing between two remote devices up to 10 cm or so. This is supported by large payment card networks, such as Visa, MasterCard, and American Express. To pay at any store's cash table, placing the phone next to the scanner would be enough to capture the transaction. It is an addition of the standard RFID (Radio Frequency Identification), which integrates a smart card and a reader in one unit. However, it is crucial to ensure that the mobile has built-in NFC technology and it is enabled for the payments, just like Bluetooth is enabled in a phone to share data.

Working of NFC Payments

To make the payment complete an NFC reader and payment devices are need to be close together, then the NFC chips interchange encrypted data. This mechanism lets the checkout function very fast and secure and makes NFC payments one of the most reliable and easy forms of payment. This is why NFC-powered payments like Android Pay and Apple Pay are becoming a popular customer payment choice. Using radio waves that are close to RFID labels used in factory, shop, and other wireless tracking applications, the contactless connection between the two devices is generated. NFC chips use a common 13.56MHz RFID frequency that only operates when both chips are positioned very near to each other.

Several digital eWallet payment applications use NFC for enhanced protection since digital wallets communicate with NFC readers only when the person opens the app on the smartphone and picks the payment card to complete the payment. Another security benefit of NFC is that only one NFC payment device is connected to the NFC readers at a time. This reduces all the chances of accidentally paying a nearby customer for other's purchases. NFC also enables its users to store their credit/debit cards on their smartphones. This allows the users to not to carry physical cards on their wallets for purchasing at online or offline stores.

What is E-Wallet or Mobile Wallet?

A mobile wallet or e wallet app or e wallet is an app that consists of your debit and credit card information which helps the users to pay for goods and services digitally using their mobile devices. Popular online payment apps or payment apps or e wallet list in India include:

  • Paytm
  • Google Pay
  • Amazon Pay
  • JIO Money
  • Freecharge
  • Yono SBI
  • Airtel Money
  • Payzapp
  • MobiKwik
  • Oxigen
  • Ola money
  • PhonePe
  • MSwipe
  • Axis Bank Lime
  • PayUmoney
  • ICICI Pockets
  • Citrus and so on

How does Mobile Wallet/Payment App Works?

In the case of First Payment using Online Payment Apps

  • Registered users will input their phone number and the provider will send them an SMS along with a PIN
  • The user will enter the received PIN, authenticating the number
  • Now the user has to input their credit card information or another payment method if required (not required if the account has already been added) and will proceed to validate the payments

For Subsequent Payments through E Wallet Apps

  • The user will have to re-enter the PIN to authenticate and validate the payment process

Features of E-Wallets

Instant Payments

The money transfer between the payer wallet and the payee wallet will happen within a matter of a few seconds, instead of hours or business days in an e wallet account. The feature provides huge benefits as payments can be done anytime and from anywhere making fund transactions immediately and this will increase the control of personal and business funds.

Managing Virtual and Physical Card Operations

The emerging technology has helped the e wallet app to store the user’s credit or debit card data, which can be used to make money transactions at any time from anywhere across the globe. The evolution of e-wallet simplifies the user’s finances and it conveniently helps to aggregate all their cards in one central space.

A mobile wallet or payment app is safer to carry all your cards with you as it avoids the user to physically carry the credit card. The software helps the app to encrypt the card data without storing the card number using high-grade security.

Bill Payments

Payments App is one of the critical mobile wallet features as most of the youngsters prefer to pay bills online be it for shopping, groceries, restaurants, movie tickets booking, flight tickets booking, rent, tuition, utilities, loans, and so on. With the digital cash moment gaining pace, mobile wallets are indeed becoming a part of essential services for a common man.

Easy and Fast Self – Registration

The main intention of the introduction of e-wallet is to save people’s time, efforts and ease to do the transaction. The simple self-registration process comes in handy for the users which pushes them to go for the app without thinking twice before using it.

Usually, the self – registration process has the following steps

  • Downloading the app and running it on the mobile phone
  • Signing up for it by providing the necessary data
  • Confirming the registration
  • Setting up of password and login
  • Linking up with debit or credit card or bank account, as per requirements
  • Adding money in the wallet
  • Finally using the wallet

Though the registration flow is a one time process, it makes a crucial first impression that lasts forever.

Payments To And From Respective Bank Accounts

A payment app will allow for instant money transfer to any bank including an individual’s account in the same bank as well as transfer to another person’s account held in different banks. The payment app owner will have a variety of options for sending and receiving business or personal money within just a few clicks from wherever you are and at any time based on the requirement. One has to first download the online payment apps in their smartphones. Most of the payment apps download is available in both Android and IOS based phones. 


The moment mobile financial services come into the picture, individuals prefer the highest security to adopt it. It is essential for money transactions to be safe and secure from one end to another. Payment Mobile Apps can be secured with a lot of robust technologies such as passwords, one – time passwords through SMS, point to point encryption, security questions, biometrics, out of band authentication and so on.

Despite the proven fact that digital wallets are more safeguarded when compared with credit cards, the growing concerns of safety in consumers' minds remains the main obstacle to adopt payment apps.

Merchant Payments using Contactless Technologies

The up-gradation of technology has many merchants across the globe who are realizing the need to use various mechanics that accepts digital wallets. Most of the retail clients have made arrangements to make in-store payments using the mobile wallets via contactless methods be it using QR – code or near field communication and so on.

NFC or Near Field Communication is a contactless remote technology that works within a close distance say up to 10 cm and it provides people with secure payments between the point of service devices and their respective smartphones.

Quick Response Code or QR code is one of the popular forms of payment methods and it is very similar to a bar code. The user has to first scan the QR code either using a smartphone or a camera which interprets the bar code and a related application or a web site open through which payment can be made.

Most of the payment apps provide NFC and QR payment facilities as the demand for the contactless transaction and the convenience which it offers to the users is growing seamlessly.

Coupons, Rewards, Discounts

The use of payment apps and e-wallets provides its users with coupons, discounts, rewards, loyalty points, and so on. Digital wallet solutions will have tie-ups with many firms that provide offers, discounts, coupons on using the payment apps. The e-wallets form an ideal environment to provide deal-seeking consumers with a huge range of benefits and helps mobile wallet app to stand out in the market.

Benefits of Payment Apps & e-wallets

The following are the list of benefits or e wallet advantages:

Customer Convenience

The best advantage of using a payment app is customer convenience as they will be able to make payments using their mobile phones either using the contactless payments or by scanning QR code instantly. The payment apps India can be made by using either Samsung Pay or Android Pay or Apple Pay. One can easily leave the cash and cards at home and use their phones to make payments instead. Payments made using a mobile wallet is often easier and faster than swiping or inserting the cards.

Secure way to make payments

Payments made using mobile phone apps allow the user to use the cell phone to make in-store purchases. These apps use a technology which is called as Near – Field Communication (NFC) all you have to do is to tap or wave your phone to make payments at the point of service (POS) terminal.

Most of the time, these apps use either encryption or protected code to minimize the threat to the personal data of users. Your original card number will not be stored on the device or with the retailer and instead, the system will mask the card numbers by assigning them with a random number or token for each purchase. If in case, a hacker tries to hack to gain access to store data or your device, they will only get useless information. E-Wallets offers a great level of security for the financial data of the users.

The user can add a fingerprint or PIN or Password as an additional layer of security for the phone to enhance the surveillance coverage.

Improves Cash Flow

The introduction of e-wallets has improved the cash flow in the markets. For starters, most of the customers prefer to pay their bills using debit/credit cards over the traditional method of cash payments. Most of the mobile payment processors will transfer funds to a business account under three days.

A faster way to make payments

All the users have to do is tap, pay and go. With the increase in the number of people who use mobile phones, the e-payment system has gained momentum worldwide. All one has to do is to simply wave or tap the phone in front of an NFC compatible terminal, with this single action, the user has approved the transaction. This will result in a contactless transaction, despite securing the card number which is never revealed, in addition to this, the process is faster when compared to using debit or credit card which needs to be inserted in the device or for swiping purpose.

Integrates Loyalty Programmes

The use of mobile payments makes it possible to integrate loyalty and reward programs as customer information will be stored in the app. For example: being able to send customers a coupon when they are close to your store. This will help the customers to automatically receive the reward points or coupons for every transaction which they make.

Drawbacks of using Payment Apps & e-wallets/e-wallet Disadvantages 

The following are the list of drawbacks or e wallet disadvantages:


Security remains one of the top concern amongst the owners and customers. It has been found the half of the mobile payments are not safe and secure.

Adoption of users remains slow

Most of the customers prefer to stay in their comfort zone, that is they either prefer to make payments using cash or debit or credit card. Though mobile payments are tied to a credit card or debit card or bank account, customers prefer to swipe their card or insert their cards in the terminals instead of waving their phone over the terminal.

Expensive Technology

Though it is a proven fact, that using mobile payments is less expensive than the traditional POS systems, it still requires new hardware including that of a terminal or smartphone which supports Near Field Communication.

It is impossible to make payments, if you still possess an old credit or debit card terminal or if you do not have a smartphone. One should also have a strong internet connection and updated infrastructure is a must to process mobile payments.

Difficult to Read Terms and Conditions

It is a must and mandatory for the users of mobile payment apps to understand the terms and conditions. Like any other business agreement, the business owners will have to first read and understand the terms and conditions which come in with the payment apps.

If in case, the user fails to read the fine print mainly when it comes to processing fees, then you will be in for an unwelcome surprise when you open your invoice at the end of the month.

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