Towards cashless economy.
N ANDAN Nilekani in his latest book, Rebooting India, while talking eloquently about the need for a cashless economy, quotes journalist David Wolman narrating a story about the unexpected consequences of switching to an electronic payments system.
Wolman recounts how in the year 2010, local police in the Afghan province of Wardak got 30 per cent more money as they started receiving their monthly salary electronically.
Interestingly, this was not an accounting error; it was the result of massive corruption among senior officials in the system.
The e- wallet revolution is a big step in this endeavour towards a cashless economy. As per the RBI guidelines, there are three kinds of e- wallets -- closed, semi- closed and open. A closed wallet is one that is issued by a company to its consumers for inhouse goods and services. This wallet, however, doesn't alow cash withdrawal or redemption. Several online shopping portals like Flipkart and Jabong offer this wallet.
As for a semi- closed wallet, it is used by firms like Paytm, MobiKwik and PayU. A semi- closed wallet can be used for goods and services, including financial services, at select merchant locations/ establishments that have a contract with the issuing company to accept these payment instruments.
These wallets, too, do not permit cash withdrawal or redemption.
Open wallet, which can be issued by banks alone, is used for purchase of goods and services, including financial services such as funds transfer at merchant locations, and also cash withdrawals at ATMs or business correspondents.
An example of an open wallet is M- Pesa by Vodafone in partnership with ICICI Bank. Vodafone also offers M- Pesa as a semi- closed wallet.
-- By Mail Today Bureau
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