Digital Wallet – Making Digital Payments Convenient

digital payments India


Some call it a virtual wallet, some call it a mobile wallet and some address it as an e-wallet. Millennials have found digital wallets to be extremely convenient. A digital wallet is likened to a traditional leather wallet. It is a safer and convenient way to safeguard your money and cards. It stores your personal and financial information in a digitized form. It is an electronic platform that allows individuals to make electronic transactions.

Digital wallets allow us to perform offline as well as online transactions to merchants who are registered with the digital wallet service provider. In today’s post, we look at the working of digital wallets and the various wallet service providers in India.


Working of Digital Wallets

The working of a digital wallet is different from that of other card payments. A digital wallet makes use of a Near Field Communication (NFC) controller and antennae to enable mobile devices to send out account information to devices at payment counters. A secure smart card chip on the phone stores and allows access to the account information. All this can be executed via the installed digital wallet application on your smartphone. The communication is not restricted to NFC, but can also be done via web links, QR Code, SMS or even social media.

During the payment process, the shopper is authenticated. Then the shopper has access to the full features present on the digital wallet account. Merchants have to strongly consider their customer base while setting-up a digital wallet service because not everyone will be intending to make payments via digital wallets. In the world of digital wallets, there is not much difference between customers or merchants. It is just an accounting ledger convention wherein the payment from a customer to merchant is just a database update (as all the money is flowing in the wallet itself). The working of a digital wallet is only effective if the API integration, for merchants, is done properly.

  • It requires effective security and permissions to access your information
  • The wallet can be used to purchase products online or offline
  • A password, QR code, an image or some authentication code is used for security
  • The digital wallet is linked to your bank account
  • Digital wallets allow currency conversions
  • Shoppers can also create an unverified digital wallet at the time of payment
  • It can also be used for authentication. For example: to verify the age while purchasing alcohol

Digital wallets can be differentiated into 3 categories

Open Wallet

Along with the purchase of goods and services, including financial services, open wallets are also used for fund transfers or at POS terminals that accept cards as payment. Open wallets can also be used for cash withdrawal from ATMs. Examples are Vodafone MPesa, VISA, MasterCard, RuPay, etc.

Semi-Closed Wallet

A semi-closed wallet can be used to buy goods and services, and also for financial services. This is although used at select merchant locations or establishments. These merchants must have a tie-up with the wallet issuer. Examples of this are PayU, PPI, PayTM, MobiKwik, Oxigen etc.

Semi-closed wallets neither permit redeem, nor a withdrawal of cash and are considered to be the most downloaded/en vogue digital wallets in India.

Closed Wallet

A closed wallet is issued by a digital wallet company to a consumer to buy goods and services, exclusively from that same company. Examples of such wallets are MakeMyTrip, Shoppers Stop Card, Jabong and Starbucks Card. In case of a refund/cancellation, your refunded amount is returned to your wallet.

 Advantages of Digital Wallets

  • The biggest advantage for customers is convenience – no need to carry cards or cash
  • Makes purchases easy with a ‘tap-to-pay’ approach
  • Enables automatic redemption of offers
  • Allows for enhanced security during transactions due to encryption
  • Faster processing of payments

digital payments India

Digital Wallets in India

You can get in-depth information regarding digital wallets online, but we have put up a brief listing of digital wallets being used in India. They are not listed in any particular order.

Airtel Money

Using this app allows users to easily recharge their Airtel prepaid account or pay their postpaid bills. This wallet can also be used to shop online if your wallet has cash loaded in it. Airtel Money is extremely safe and each transaction or payment can only be authorized via a secret 4-digit mPin.

Citrus Pay

One of the top digital wallets in India, the Citrus Pay wallet offers its customers’ payments options towards businesses. It is reported to have close to 800 million customers.


Ask any young millennial and Freecharge is surely one of the apps installed on their smartphone. Freecharge provides an equivalent amount of coupons for every recharge made. This surely goes a long way in saving the amount spent on bills online. A reported 20 million registered users use Freecharge as a mobile payment solution. Freecharge also allows the user to donate money to a registered NGO. Its common e-wallet features include adding money using a credit card, debit card or net banking and instant payments. They also provide discounts to users on transactions.

ICICI Pockets

The ICICI Pockets e-wallet allows its users to connect to their respective bank account for mobile transactions. You can send/receive money, book tickets, recharge online, pay for shopping online and share gifts with friends. It is a fast, convenient and secure e-wallet for mobile transactions. Funds can also be transferred to email ID contacts or WhatsApp contacts.


Oxigen is a Fintech company founded in 2004 and is one of the major providers of digital payment in India. The Oxigen wallet is used for making purchases online and paying bills. Oxigen is considered to be a safe and secure digital wallet which asks a user to input a 6 digit OTP that is sent to the registered mobile number. It covers almost all major banks in India. It provides both online and offline modes. The offline mode allows payment to be made at physical stores such as CCD, Croma or BigBazaar etc. Oxigen is also tied up with Goibibo, Indiatimes, KFC, eBay, Jabong, Justdial, etc.

Citi MasterPass

Another free digital wallet on the list, Citi MasterPass helps you move through an online shopping checkout process quicker.


Mobikwik e-wallet payments system helps users to store money. They are used to recharge your phone, getting discounts on deals, pay bills, load money using a credit card, debit card, and net banking; door-to-door cash collection and making third-party purchases.

Mobikwik is tied up with close to 2,00,000 merchants and has around 40 million customers.

HDFC PayZapp

HDFC PayZapp allows digital payments via one click. You can also compare hotel bookings and flight ticket pricings. You can even buy music and pay your bills via the PayZapp. All you need to do is connect your debit/credit card to the app.


Launched in 2010, Paytm is currently the largest mobile wallet app in India. It allows payment of mobile bills, buying movie tickets, shopping online; transfering money directly to your bank or someone else’s bank account and paying for your Uber journey (with cash back).

Paytm is adopted by SME vendors, rickshaw drivers, and shopkeepers. Such is its reach. Paytm is also tied up with brands such as LG, Nike, Onida, Sony, Lenovo, Panasonic, and more.

Vodafone MPesa

MPesa allows a secure, fast and convenient medium for making mobile transactions. It is a subsidiary of Vodafone M-Pesa Limited jointly operated with ICICI Bank. The wallet allows redemption or cash withdrawal for its users.


Sweeping the nation since 2016, Jio’s digital payment app – JioMoney, offers easy, fast and secure transactions. The app offers great discount and offers to its users. With more than 6 million subscribers, Jio provides the largest internet service in India. JioMoney can be used to make recharges online, book tickets online, transfer and receive money; and also pay for your cabs. It also offers massive discounts and deals on making the first transaction.


Chillr has tied up with close to 52 banks across India. It easily allows management of multiple accounts from one digital wallet. You can make payments for recharging your mobile, book movie tickets online, receive and send money and also avail discounts on transactions.

State Bank Buddy

A product of State Bank of India, ‘Buddy’ is an online wallet that is available in 13 languages. Non-SBI account holders can also send money via Facebook to other bank accounts. It can also be used to book movie tickets and hotel reservations. The cash to wallet can be loaded using a credit card, debit card or net banking. You can also set reminders for due payments.


A product of PayU India, PayUMoney is a payment gateway that allows merchants to collect payments from customers. The mode of payment can be credit cards, debit cards or via net banking. They also offer email invoicing and SMS notifications. It is a safe and secure platform and used across India by e-commerce websites.

PayUMoney is also introduced as a mobile wallet service. The wallet allows its users to perform online transactions. It also offers reward points for every transaction. It also provides a PayUMoney Buyer Protection which ensures the product reaches your designated address.


Juspay Safe is a payment browser that allows users to make online payments fast with just 2 clicks.


Launched by Axis Bank in 2015, LIME was one of the first smartphone apps in India that integrated shopping, payments, integrated wallet, and banking. It also allows users to invest in a deposit and share your wallet.

Ola Money

Launched in 2015, Ola Money is a digital wallet offered by Ola. They are not just used towards making payments for Ola cab rides; you can also use them for purchasing groceries and book flight tickets.


Launched in 2012, PayPOS is an app that allows small business owners to receive payments easily via debit cards or credit cards. They are also capable of processing electronic transactions.


Loan Singh is a digital lending platform that prides in providing online unsecured personal loans to salaried individuals. You can apply for quick funds as an easy emergency loan which is not a bank loan, but are provide with best personal loan interest rates. The instant funds, or instant loans, are small loans taken for purposes such as home improvement, house repair, marriage/wedding, medical, second-hand car, second-hand bike, vacation and travel. You can calculate your easy EMIs using our personal loan EMI calculator. We accept bank statement, PAN and Aadhaar for quick loan approval. A bad credit score or credit report errors can lead to personal loan rejection. The ‘Loan Singh Blog’ is one of the best finance blogs in India.

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  4. Thanks for sharing this information, digital wallets are the futures of payment gateway.
    I personally prefer Puut Wallet for the digital payments, sharing money with friends and family domestically or internationally is made easy, safe and convenient with Puut Wallet.


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