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How Mobile Wallets Affect Your CIBIL Score?

Mobile wallets or e-wallets are becoming increasingly popular. A large number of traditional banks and e-commerce platforms have launched their own versions of these digital products. Considering that mobile wallets are fast entering as the most liked mode of sending and getting payments, one ponders whether mobile wallets influence your check of the credit score? In fact, using mobile wallets does influence the outcome of your credit score in certain ways.

  • Security : While most banking companies offer complete assurance on the security of their e-wallets, you should accept this promise with due consideration. On the internet nothing is totally safe. Tech wizards have shown ways to breach the security measures of these companies and hack into their databases. The security of your wallet can be jeopardized if you lose your phone. Many surveys have discovered that people coming across lost phones try accessing personal data on the phone. This exposes your financial details to risks. Considering that your e-wallet is directly linked to your account, anyone finding your unlocked phone will be in a position to divert funds from your account to your e-wallet and utilise it for transactions. This makes it a complete theft of identity.
  • Damaged Creditworthiness : E-wallets can influence how you spend money. Hence it can influence your creditworthiness and make getting loans a complete struggle. To start with, your psychology has a role to play in how you expend your money. For instance, if you purchase a smartphone worth Rs. 30,000 in by paying money in physical form, it gets really hard to let go of that funds. In this situation the transaction is visually there and hence the loss is tangible. Yet, if you spend money using cards or e-wallets, the transaction has to be electronic, making it basically a simple exchange of figures.
  • Credit Rating: The finest credit rating companies seem to understand that this change is happening in the financial service sector. A sector called Fintech is fast rising as a merger of finance and technology. Also, with people taking up new ways of managing and spending their money online, the agencies for credit rating are making use of alternative data to assess people’s creditworthiness far better.

People who are not careful on how they utilise their e-wallets are running the risk of hampering their own rating. In some time, these people will have no option but to fail a loan with a low CIBIL score. You must have a good understanding of the e-wallets will affect your credit report. So, ensure that you pay attention to this:

  • Unlike what you assume, not using mobile wallets at all is not a good idea. This is simply for its contribution to your score in a positive way.
  • Use your mobile wallets within limits. Don’t overspend, but don't underspend either.
  • Keep an eye on your bank account. When you spot unknown transactions, you need to send a remark to your bank at once.

Mobile wallets are important to your financial profile, don’t have any doubts about it.

FAQs on How Mobile Wallets Affect Your CIBIL Score

What is the mobile wallet service registration process?

The service registration process is as follows:

  • Download the app and launch it
  • Sign up by providing details
  • Link debit/credit card
  • Setup password, add money and use

What is the function of a mobile wallet?

A mobile wallet is a product based on Near-Field Communications or QR code technology. This implies a digital storage of payment-related encrypted information. Sometimes there are variations in the method of payment storage and this changes from one wallet to other. Besides this, other information such as store coupons, loyalty programs, and other personal identity-related information are also stored.

  • A mobile wallet works by communicating with terminals using various types of information transfer technology
  • Most mobile wallets use NFC technology to communicate with payment terminals

How to use a mobile wallet?

  • Open the app
  • Enter the PIN
  • Choose the type of transaction you want to carry out
  • Make payment

What are the advantages of a mobile wallet?

The advantages of a mobile wallet are:

  • Cashless: Mobile wallets help customers go cashless and card less, eliminating the need to change currency. This offers consumers the convenience factor.
  • Secure: It is not always wise to carry a lot of money as there is a chance one might lose it. Mobile wallets use implies that one does not have to carry cards or cash. Cash can be stolen and cards can be stolen or misused but this is not the case in mobile wallets. Digital wallets are considered safe due to encrypted data usage.
  • Ease of Use: Mobile wallets are fast becoming the most convenient form of payment mechanism.
  • Fast Payments: All mobile wallet-based transactions are always much faster, be it online or offline payments. One mobile wallet app can be utilised for various purchases.
  • Multiple Fronts: The main advantage of a mobile wallet is that one can store multiple card and account information in one single app and choose whatever payment mechanism you want to use.

What kinds of Indian mobile wallets exist?

There are various digital wallets in India. Such as:

  • Open Wallets: These types of mobile wallets are generally issued by banks. As a mobile wallet user, you may buy goods and services, transfer money and withdraw money through these mobile wallets.
  • Semi-open Wallet: A semi-open wallet allows users to buy and purchase goods but not withdraw funds. This wallet requires you to fill money and utilise it for various purchases.
  • Semi-closed Wallets: These types of wallets allow consumers to make merchant payments. A mobile wallet carrier mostly collaborates with specified merchants.
  • Closed Wallets: In this, a specific amount of money is locked with the wallet company with no withdrawal facility.