Digital Wallets In India - Best money Transfer App in India

What does Digital Wallet mean?

Gone are the days when people used to flock the streets of popular shopping destinations of the city. Shopping was meant to be done only on the weekends and public holidays. Shopping with family and friends was so much fun. E-commerce and digital wallets have completely changed the way people shop these days.

A digital wallet is a prepaid instrument that allows you to make online monetary transactions and purchases. This includes purchasing goods with the use of a computer or a smartphone both online and offline. Bank account can also be linked to the digital wallet to make payments. Peer to Peer transactions are allowed on digital wallets.

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Type of digital wallets in India

Reserve Bank of India, RBI, has classified digital wallets into 4 categories mentioned below:

(i) Closed system payment instruments: These are financial instruments that are issued by business establishments and can be used only at their respective establishments. These instruments don’t allow cash withdrawal or redemption.

(ii) Semi-Closed system payment instruments: These payment instruments can be redeemed at a group of clearly identified merchants. These instruments don’t allow cash withdrawal.

(iii) Semi-Open system payment instruments: These payment instruments can be used for purchasing goods at those merchants who accept cards. Semi-Open system payment instruments too don’t permit cash withdrawal.

 (iv) Open system payment instruments: These payment instruments can be used for purchasing goods and services and also allow users to withdraw from ATMs.

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How to use Digital Wallets?

Digital wallets are involved with monetary transactions. So to use a digital wallet, you must first load money into the digital wallet. Money can be loaded by linking your bank account with the digital wallet or when a person transfers money from his digital wallet to yours. Once you have money in the digital wallet, then you can start purchasing goods at redeemable merchants.

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Advantages of  Digital Wallet

• Digital wallets can be used to make online purchases: Most E-commerce businesses allow the use of digital wallets to purchase goods online.
• To pay utility bills: Various utility bills like electricity, prepaid recharge, telephone and the like can be paid through digital wallets.
• Movie tickets: Movie tickets can be purchased through digital wallets.
• Ordering food: Food can be ordered both online and offline with the use of digital wallets.
• Travel ticket bookings: Bus, flight and train ticket bookings can be made using digital wallets.
• Online fund transfer: Person to person online monetary transactions can be made through a digital wallet.
• Purchase financial products: Many financial products like mutual funds and insurance can be purchased online using a digital wallet.
• Cashbacks, reward points and discounts: Many merchants offer cashback and discounts on paying through a particular digital wallet.
• Convenient to use: The use of a digital wallet is user-friendly and fast. Checking out at a merchant outlet is faster if payment is made through a digital wallet.

Drawbacks of  Digital Wallet

• International restrictions: Different countries have different digital wallet service providers. Therefore, your digital wallet may not be usable in other countries.
• Limited merchants: Your digital wallet may not be accepted by few merchants due to their collaboration with other digital wallet service providers. Therefore, the usage of digital wallet is restricted.
• Dependent on devices: Digital wallets can be accessed and transactions made, only with the use of a device. Carrying a device is mandatory to make transactions on digital wallet.
• Risk of losing money: As digital wallets are mostly used on smartphones, there is always a risk of losing money. Fraudsters can easily crack open your smartphone’s password and hack into your digital wallet and empty money.

Top 10 Mobile Wallets In India

1) Paytm: Paytm is the most popular mobile wallet in India. Paytm is owned by One97 Communications and was launched in 2010.

2) MobiKwik: MobiKwik is one of the pioneers in the mobile wallet industry in India. It was launched in 2009.

3) PayUMoney:  PayUMoney was launched to enable customers transact, by adding money to the wallet using debit or credit cards.

4) Oxigen Wallet: Oxigen Wallet is the oldest digital non-bank wallet in India which was launched in 2004. It provides micropayment services and remittances in real time. 

5) FreeCharge: FreeCharge is a popular digital wallet in India. It was launched in 2010 with headquarters in Mumbai.

6) ICICI Pockets: ICICI bank launched this app to facilitate customers use mobile wallets. This app is powered by VISA.

7) LIME: It was launched in 2015 by Axis bank, the third largest private sector bank in India.    

8) PhonePe: PhonePe was launched in 2015. It is headquartered in Bengaluru. PhonePe recently became a UPI enabled digital wallet. 

9) SBI Buddy: SBI Buddy is a mobile wallet launched by SBI to facilitate customers use the mobile wallet. It was launched in 2016.

10) PayPal: PayPal is a US Based Fintech company which is slowly gaining popularity in India.

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