Mobile wallets are often better than traditional banking systems. Their app interfaces are smoother, it’s easier to make payments with fewer steps, and if one looks hard enough, always some cashbacks around the corner. But one area where mobile wallets lose out over traditional banking is interest – your wallet balance stays as it is, while money in your savings accounts grows at around 4% per year through interest.
But that seems set to change. Mobikwik has announced that its users can earn “6% annual profit” on their wallet balances. The profit will be credited monthly into user accounts. There’s a catch however – users need to maintain a minimum average of Rs. 5000 in their wallets through the month.
“This announcement marks the revolutionary transformation of MobiKwik into a digital institution –to fulfil every Indian’s end to end financial needs by offering micro loans, profits on wallet balance and cashless transactions. Our mission is to enable users to pay, save, borrow and invest, all using their MobiKwik mobile wallet”, said Upasana Taku, the co-founder of MobiKwik.
Mobikwik is also poised to become a digital bank and aims to cater to the needs of its users through micro loans and cashless transactions, and its wallet has 30 million users. Paytm is currently the largest digital wallet in the country with over 120 million users. But Mobikwik seems to have stolen a march over its rival with its latest interest offering.
Mobile wallet firms typically earn interest on the money that’s stored with them, while not passing any of it on to their users. This acts as a source of revenue for these companies, who use this money to entice users through cashbacks and offers. Mobikwik has taken a more direct approach by providing “profit” instead. It remains to be seen what the consumer response to this move will be, but one thing is for certain – with payment banks on the horizon and digital wallets offering interest, the lines between wallets and traditional banking are fast blurring.