Sidekicks galore

The origin of the word sidekick comes from old pickpocket slang in London from the 19th century. The kick was the nickname for the front part of the trousers and grabbing someone’s wallet from the side pocket on the front was considered a tough task. Hence the side-kick was the gentleman’s safest bet.

In recent times, it seems like most startups , specially those in the hyperlocal and food space, have decided that their sidekick is the digital wallet. Most companies are spending huge amounts of money, through discounts, freebies , cashback and other initiatives to get people to register on their digital wallets and store money. While I understand the logic behind converting people to their own wallet (greater control over transactions, ability to track usage and transaction flow , money earning interest) , I feel that that many brands are making a mistake by spending an effort on their own wallet.

Currently we have a couple of major players in the digital wallet space(PayTM, Mobikwik, PayU, Airtel Money) and we can also consider Ola Money and Flipkart’s former initiative. It makes sense for newer players to either tie up with one of them(PayTM/Mobikwik/Ola Money) or ask a Visa / Mastercard to provide an alternative. Managing a wallet comes with it’s own set of hassles and regulations and the net gains from getting some players on your wallet is lost by the effort put in.More importantly at some stage, we are going to reach the same point faced by credit card companies some years back. As more and more brands and companies started issuing their own loyalty cards, people were worried about which cards to keep and which to give up. Thus at the end of the day, only a few top loyalty/credit cards were retained while a large number were used once or twice and then given up.

From a customer standpoint, there are 3 problems –

a) People are going to only stick with a wallet as long as they are getting cashback/discounts/ benefits. Once the wallet is no longer able to provide those, they may give it up or if it becomes the major player they will keep using it when necessary

b) People are going to wonder what is going to happen with their money if they are not using a wallet or if the brand discontinues the wallet. Will the money be returned directly to the account or will it be given in form of credits or lost?

c) While digital /mobile wallets do make it easier for the customer, why will a shop owner pay the credit card company/payment gateway and the wallet company for a transaction? Thus overtime, the customer will see lesser traction from outlets and vendors which defeats the idea of a cashless economy

While I am not against the concept of a cashless economy and support digital wallets, I think the time is apt for banking institutions to create a consortium which will provide a single wallet standard. Banks can create apps/ methods for using the wallet standard while ensuring interoperability. If the banks provide the product, it can be an additional payment mechanism for vendors so they do not end up getting hit twice while customers need not have to share data with multiple parties.

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