Loan Singh Explains – The Presence of Digital Wallets in India



‘The age of the cashless’… No, this isn’t the title of Ridley Scott’s upcoming movie; it’s actually the time we are living in right now. It is a time when we can move out of our homes without carrying cash. Go to a supermarket, visit a petrol station, dine-out at a swanky restaurant, pay a friend before he comes and says “Arey yaar woh paanch saal pehle ke hazaar rupaiye dene hain tumhe

We are definitely living in exciting times. Everything has now become digital. Loan Singh came-up with digital lending to tone down the cumbersome traditional banking process to just a few clicks. Digital payments have made it so easy and convenient to pay your EMIs and other credit repayments. What if we told you that you won’t even a need to carry a wallet? A wallet held our debit cards, credit cards, ATM withdrawal receipts, etc. A digital wallet on the other hand can help you carry all this, on your smartphone. Let’s learn more about these digital wallets.


Digital Wallets

A digital wallet is likened to a traditional leather wallet. It is a safer and convenient way to safe guard 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.

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 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 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 have a tie-up with the wallet issuer. Examples of this are PayU, PPI, PayTM, etc.

Closed Wallet

A closed wallet is issued by the digital wallet company to a consumer to buy goods and services, exclusively from that same company. Examples of such wallets are Shoppers Stop Card and Starbucks Card.



  • 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


Global Coverage

A digital wallet is made up of both software and information components. The software provides security and encryption for the personal data and transactions. The information component is basically a database of user input information. The information would generally be shipping addresses, billing addresses, payment methods, etc. Digital wallets are quite popular all around the world. There are dedicated digital wallet devices such as the biometric wallet by Dunhill where it is a physical device that holds somebody’s cash and card via a Bluetooth mobile collection. There are further explorations being done for smartphones with NFC capabilities. Examples are Samsung Galaxy series and Google Nexus smartphones, which utilize Android Pay; while Apple’s iPhones utilize Apple Pay. The M-PESA mobile payments system and micro financing service has widespread use in Kenya while MasterCard PayPass has been adopted by a number of vendors around the world.



Some examples of digital wallets in India are

  • Airtel Money
  • Citi MasterPass
  • Citrus Pay
  • Ezetrap
  • Freecharge
  • HDFC PayZapp
  • ICICI Pockets
  • JioMoney
  • Juspay
  • LIME
  • Mobikwik
  • MomoeXpress
  • MoneyonMobile
  • Mswipe
  • Ola Money
  • Oxigen
  • PayMate
  • PayTM
  • PayUMoney
  • State Bank Buddy


Leave a Reply

Your email address will not be published. Required fields are marked *