E-wallets vs bank accounts: Which one suits you the best?

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The Reserve Bank of India (RBI) in its most recent monetary policy announced to facilitate interoperability of full KYC prepaid payment instruments (PPIs) such as mobile wallets and prepaid cards. The announcement makes it mandatory for wallets to be interoperable which was earlier voluntary. This will make mobile wallets function very similar to bank accounts, in fact with more ease and benefits than the former.

The RBI defines e-wallets are Prepaid Payment Instruments (PPIs) that facilitate (a) purchase of goods and services, including financial services, (b) remittances, (c) funds transfers, etc., against the value stored in/on such instruments. The latest decision will allow individuals to send money from one wallet to another and also from a wallet to the bank account. The enrolment for e-wallets is easy and digital-friendly. Unlike bank accounts, one does not need to have a minimum balance to keep his or her e-wallet account active. E-wallets are easily accessible and manageable. A student can more easily have an e-wallet than open a bank account.

Some key features that included in the RBI’s policy for e-wallets: – Customer can transact money from wallet to a bank account and company’s wallet to another – Upper limit of the outstanding balance is kept at Rs 2 lakh – Customer will also be able to use the wallet at the point of sales terminals and ATMs to withdraw cash – RBI has also allowed e-wallets to operate as centralized payment systems like RTGS and NEFT.

This means that now a person can transfer his money from a PhonePe wallet to someone else’s Paytm wallet, which was not the case earlier. This will also facilitate various usual and daily transactions like buying ration from grocery stores, paying education fees to institutions, and other business-related transactions.