goibiboOnline travel site GoIbibo has launched a closed wallet called goCash, offering it to customers as a solution for easily making online travel bookings after a previous booking has failed, for receiving rewards or redeeming points. According to the website, even though it takes less than 24 hours to initiate refunds from banks in case a transaction fails, banks themselves take between 2 to 5 business days to credit the money back to the customer’s account. In addition, in case of Rewards and/or Points redemption, this can take as much as 15 business days.

gocash-screenshot

GoIbibo says that, according to its data, an average 2 out of every 3 people book again within 10 days of cancellation, and the goCash feature allows customers to use their cancellation money for their future booking. As a launch offer, goIbibo is also giving users 2% bonus goCash for a three month period.

We liked a couple of things about their approach:

1. Opt-in approach: users can choose to opt for goCash instead of a refund to debit/credit card while cancelling a ticket.  They aren’t forcefully creating goCash accounts for cancellations and failed transactions, and only incentivizing opting in.

2. goCash first on booking & hybrid billing approach: if the user is logged in and has goCash in his account, goibibo will automatically deduct the booking amount from goCash and the user only needs to pay the difference. As a consumer I’m sometimes not sure about putting money in an online wallet because if it is insufficient for a transaction, then it means being forced to add more money to a wallet first. A hybrid approach, where a user only needs to pay the difference allows the user to use the entire goCash amount without being locked in.

gocash-hybrid

Why this works for goIbibo is that apart from making it convenient for the customer to book tickets with refunded money, it also enables them to retain the customer: if you have money in a GoIbibo wallet, you’re more likely to use their service.

Note: do check our online travel outlook for 2014

Unutilized Cash

The part about utilizing the entire amount in the closed wallet is important: we wonder how many unutilized wallets accounts exist, where money is parked, but the user either doesn’t remember or doesn’t utilize it. It’s akin to banks and unclaimed deposits. This is a problem for both closed wallets as well as semi-closed wallets.

In that context, does anyone know what telecom operators do with the money that remains in unused prepaid accounts, when they churn those customers out? Can they lay claim to that money?

Semi Closed Prepaid Wallet via PayU?

The Ibibo group also owns online marketplace Tradus and payment gateway PayU. There might be an opportunity for PayU to apply for a prepaid semi-closed payment license to allow wallet based payments not just on Ibibo owned sites, but also across the web. Competition is heating up in that space, with businesses like Paytm, Mobikwik and even Reliance Jio’s Rpay payment solution getting licenses.