Update: many readers, including those in the comments, have informed us that this is isn’t new. Our apologies – we weren’t aware, and quite liked this way of addressing the payments gateway problem, so thought we would share it with our readers.
Eariler: Mobikwik, an online recharge and apps purchase company has launched a closed wallet system to address payment gateway issues. Given that most commerce companies face issues with payment gateways, wherein transactions don’t get completed because of payment gateway failures, the company now allows buyers to add money into their account to allow multiple purchases. Speaking at the NASSCOM products conclave, Mobikwik co-founder Bipin Preet Singh said that the idea is to ensure that only 2 in ten transactions need to go through payment gateways.
Responding to a question from MediaNama about whether they need a prepaid wallet license for this, he said that it is allowed by the Reserve Bank of India if operated under certain conditions, and as long as you’re servicing your own customers (not allowing external transactions).
We have heard of other ventures also planning such wallets to address payment gateway issues, but we can’t name them since it is under embargo. This does once again highlight the magnitude of the impact that unreliable payment gateways have on online transactions in India. There is a need to address that problem – more reliable payment gateways would be ideal, but a closed wallet system is as good a solution as any. We’ll probably see more online businesses launch closed wallets soon.
It also ensures customer loyalty since the customer already has money deposited with the site. Question is, what is the incentive for customers to deposit that extra money?