Should you give up your bank account for a mobile wallet?
With most banks offering only 4% interest on savings accounts does it make sense for people to put their money into mobile wallets such as MobiKwik?
Mobikwik, a mobile wallet company, has announced that it will offer 6% interest rate on your money. This is more than what most banks offer for your savings account.
So why shouldn’t you close down your savings account and just use mobile wallets like Mobikwik?
Let’s first look at what an average bank in India has to offer.
Most banks in India offer 4% interest rate on your savings account.
Although, there are many other schemes like higher interest rates for senior citizens (especially in public sector banks) and better rates for women account holders, mostly these higher rates come with a caveat of a greater minimum balance in your account.
For instance, RBL Bank offers the highest interest of 7.1% p.a. on the condition that the user maintains a daily balance of above Rs 10 lakh. Even its 5.1% p.a. interest comes only after you maintain a daily balance of upto Rs 1 lakh.
Similarly, Kotak Mahindra Bank's savings account needs you to maintain an average monthly balance of Rs 1 lakh in return for 6% interest.
So, why don’t you just earn 6% on your mobile wallet?
MobiKwik is offering 6% interest on maintaining a nominal balance of Rs 5,000 per month—surely a better deal than most banks.
Moreover, with payments banks on the anvil and competition in this sector growing, you can safely expect other mobile wallet companies like Paytm, m-Pesa, Oxigen Wallet, Citrus Pay, mRupee and Freecharge to begin offering interest rates on your money.
In addition to this, banks as well as telecom operators have their own mobile wallets such as, Airtel Money, Vodafone m-Pesa, Idea Money, Axis Bank’s Lime, SBI’s Buddy, ICICI Bank’s Pockets and HDFC Bank’s PayZapp.
But there’s a downside.
Mobile wallet don’t let you withdraw cash. Your bank savings account does.
So once you put money in your mobile wallet, it is locked and can only be used to buy goods and services.
But given the fact that India is largely moving towards a cashless society with Prime Minister Narendra Modi and Reserve Bank of India’s Raghuram Rajan firmly behind it this transformation, living without cash on you isn’t that great a deal, isn’t it?
Although, cash is still king for most payments or transactions that still happen in India a small push towards mobile wallets via interest rates can definitely work.