What are the types of Digital Wallets
10 January, 2024
Synopsis
- A digital wallet is an electronic version of a physical wallet, allowing you to store funds electronically and make payments securely.
- Digital wallets can be categorised into open wallets (like PayZapp) for broad transactions, closed wallets tied to a specific company, and semi-closed wallets for limited merchant networks.
- Digital wallets offer benefits such as no minimum balance requirements, faster transactions without card entry, fee-free usage, and support for multiple payment types.
A digital wallet, also referred to as an electronic wallet (e-wallet), is an application for making financial transactions that you can typically run on your smartphone. Most individuals may their mobile devices with them throughout the day; thus, making digital wallets a way forward towards a completely digital economy. One of the most attractive benefits of digital wallets is that they allow you to pay for services and/or products without any physical mode of payment, such as Credit and Debit Cards or cash. Here, you can get information on the different types of e-wallets.
What is a Digital Wallet?
You store cash in a physical wallet. A digital wallet is simply a digital form of a physical wallet where you store cash in an electronic format. Instead of paying for products and services with physical cash, you use the money stored in the digital wallet to make payments, relatively securely. Digital wallets are a type of prepaid payment instrument (PPI) and must therefore conform to the Reserve Bank of India (RBI) regulations for PPIs.
Types of Digital Wallets
There are different types of mobile wallets or digital wallets available today that are designed to serve different purposes; the three major categories of e-wallets are explained below:
Open wallet
Financial institutions like banks issue open wallets. You can use this type of digital wallet to make transactions with the list of merchants in agreement with the issuer of the wallet in addition to transferring funds and withdrawing money from ATMS. For example, the PayZapp Wallet from HDFC Bank can be used to make purchases at different merchants, make online payments and transfer funds.
Closed wallet
This type of mobile wallet is developed by a company selling a product and/or services and can be used to make transactions with only the company that developed the wallet. Also, you will be refunded any amount upon cancelling a transaction in the wallet itself.
Semi-closed wallet
Semi-closed wallets allow users to make transactions with merchants from a specific list and specific locations. The users can use these types of e-wallets to make online and offline transactions with restricted companies.
Other types of wallets include the crypto wallet, which can store the users’ private and public keys for implementing cryptocurrency transactions, and the Internet of Things (IoT) wallet, which can include smartwatches and other devices. There is another variant of crypto wallets that enables NFT (or non-fungible tokens) enthusiasts to save their digital assets, including NFTs and cryptocurrency; they are called NFT wallets.
Benefits of a Digital Wallet
Listed below are reasons why you should consider using a digital wallet for your payments:
No limitations on minimum balances: In most cases, the wallet issuer may not require you to maintain a minimum balance in the wallet. However, the issuer may set limitations on the maximum balance depending on whether you’ve completed the KYC process.
No cards needed: With digital wallets, you can load money once, and you can make multiple payments until you exhaust the wallet balance. You don’t have to enter card details every time to make payments. Thus, e-wallets allow for relatively faster and user-friendly transactions.
No charges: Typically, you can use a digital wallet without any additional charges. For instance, the PayZapp wallet in the PayZapp app is free to use, for both HDFC Bank and non-HDFC Bank customers.
Multiple transactions: You can use your wallet balance to make numerous transactions. When it comes to the PayZapp wallet, you can pay utility bills, recharge mobile phones and FASTag, make travel bookings, get brand vouchers and more.
Make Instant Payments with PayZapp Wallet
HDFC Bank offers PayZapp, a one-stop solution for your online payment needs. PayZapp Online Payments App offers an easy and swift way to make a myriad of transactions in a secure manner; the app does not store your data. From electricity bills to mobile recharges and insurance premiums to OTT subscriptions. You can link your bank cards with PayZapp and pay for products and services with your device, eliminating the need for carrying cards around. The PayZapp app also comes with a PayZapp wallet which you can load and use as a payment method. The cashpoints you earn after various payments can be redeemed as your PayZapp wallet balance. Plus, you can transfer money from your PayZapp wallet to bank accounts (charges apply). So, download the PayZapp app and enjoy seamless online payments.
Click here to make online bill payment through PayZapp on your IOS phone.
Click here to make upi payment through PayZapp on your Android phone.
*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.
