Shopping these days isn’t just about finding what you want, it’s about figuring out how to pay for it. With all the new tech around, you’ve got modern digital options and the good old traditional methods to pick from.
Each comes with its own set of pros and cons. Knowing what option works best for you can elevate your shopping experience. So, let’s get into the details and understand which method is best for you.
What is an e-wallet?
An e-wallet or digital wallet is like a virtual purse on your phone. It lets you store money, make payments and keep track of what you spend - all without needing cash or cards. For example, with Kotak 811 Mobile Banking App, you can do everything from your phone. You can transfer money instantly to anyone using UPI, scan QR codes to pay at stores or shop online with a virtual debit card. It’s super quick, easy and safe!
What is the difference between an e-wallet and a credit card?
Below are the points of differences between an e-wallet and a credit card:
Payment method
An e-wallet is like a digital version of your purse. You load money into it or link it to your bank account and payments happen instantly. It’s perfect for small, quick purchases like groceries, bills or splitting money with friends. A credit card, however, lets you borrow money from the bank to pay for things. You don’t need to have money in your account, but you’ll have to repay it later, often with interest if you delay.
Ease of use
Using an e-wallet is simple, but it requires a smartphone, internet connection and the app. You can pay for online shopping by scanning a QR code or entering a UPI ID. On the other hand, a credit card is a physical or virtual card you can swipe at a machine, tap for contactless payments or use online by entering the card details. Unlike e-wallets, credit cards don’t need an internet connection for in-store payments.
Rewards
E-wallets often offer cashback or discounts, especially during promotional offers. For example, paying a bill through an e-wallet might get you some money back or a discount on your next payment. Credit cards have reward programs where you earn points for every rupee spent. These points can be used in the future. You can use it to shop, travel or reduce your credit card bill. They also offer travel perks or higher rewards for specific kinds of spending, like dining or fuel.
Security
E-wallets and credit cards are both safe, but in different ways. E-wallets use passwords, PINs, or fingerprints to keep your money secure, and they often add extra safety with encryption. Credit cards are protected by PINs when you use them in stores and OTPs (one-time passwords) for online shopping. They also come with fraud protection policies. However, if you lose a credit card and someone uses it before you report it, you could face issues, whereas e-wallets are safer since they’re tied to your phone.
Debt and spending limit
An e-wallet only lets you spend the money you’ve added to it or that’s in your linked bank account. It is great for controlling your spending. On the other hand, a credit card has a limit on how much you can spend. It is helpful, especially for big purchases. However, it can lead to debt if you don’t pay it back on time. Do note that late payments also come with high interest charges.
Type of expenses
E-wallets are perfect for quick, everyday transactions, like buying something at a store, sharing a bill with friends or shopping online. Credit cards, however, are more suited for larger purchases or situations where you need to delay payment. They’re also widely used internationally. Furthermore, you can enjoy more benefits, like reward points or cashback, for frequent spending.
Final note
E-wallets and credit cards are both useful and secure ways to pay. The important thing is to understand which one works best for different situations. Now that you know how they compare and what they’re best suited for, use this knowledge to make better decisions. Whether you prefer the speed and ease of an e-wallet or the flexibility a credit card offers, you’re all set to handle your payments wisely.
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This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
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