Types of Digital Wallets: A Detailed Guide

Types of Digital Wallets

E-wallets are a trend today! All that a user requires is to add money to the wallet, scan a QR code at a POS or available merchant and complete the transaction easily. Instead of using hard cash currencies, e-wallet uses digital money for any kind of transaction.

These wallets are integrated into the payment applications to be used easily. The money can be added to the wallet through any of the linked bank accounts available on the payment application. Because of the easy user experience on e-wallets, a major section of the society and age group uses the same for their everyday transactions. The transactions can be of any nature like paying electricity/gas/cylinder bills, college fees, recharging the mobile phone, etc.

However, it is to be noted that not all e-wallets allow users to make payments at any store. Thus, in the blog, we will understand the types of e-wallet, their meaning and more!

What is an e-Wallet?

‘E’ in e-wallet stands for electronic; hence, e-wallet means electronic wallet. Also called a digital wallet, an e-wallet allows users to make transactions effortlessly. These wallets can be used online or at stores for easy transactions.

  • e-wallets offer the ease to make swift payments online or at physical stores
  • These wallets can be used to book train/flight tickets, pay electricity bills, book gas cylinders, school fees, complete mobile recharge transactions, and more
  • Add money to the e-wallets from any linked bank account to start using them
  • These wallets are safe to use and can be used to complete minor to major transactions
  • A smartphone, a payment application like Paytm and a stable internet connection is required by one to complete digital wallet transactions

What are the Types of e-wallet?

There are different types of e-wallets that serve different purposes according to the nature of the business and the end-users. The following are the types of e-wallet offered by issuers to their end-users to perform particular tasks-

Closed wallet

  • A closed wallet helps users to make payments through an application or website
  • They are generally developed by companies selling products or services for their customers
  • Users of a closed wallet can use the stored funds only with the issuer of the wallet to complete the transaction
  • In case of cancelled transactions or refunds, all the money gets stored in the wallet
  • Closed wallets do not allow one to perform payments outside

Semi-closed wallet

  • A semi-closed wallet offers users the ease to make transactions at listed merchants and locations
  • The coverage area of semi-closed wallets are restricted
  • Merchants need to accept the contract or agreement with the issuer to accept the payment from the wallet

Open wallet

  • Banks issue open wallets
  • Users with open wallets are allowed to use them for all kinds of transactions
  • Open wallets offer the flexibility to transfer funds easily
  • One can make payments online and at the store at any point in time
  • The open e-wallets service provider allows users to make transactions from any place in the world; however, it is mandatory that both the sender and the receiver should have their respective accounts on the same application

Crypto wallet

  • Crypto wallets store public and private keys of the users
  • The keys can be cryptocurrencies certificates of ownership
  • Hardware wallets or cold wallets are there to provide an additional layer of security and safety
  • A USB stick can be used to operate wallets offline
  • These wallets can be used to process payments with cryptocurrencies

IoT wallet

  • IoT stands for Internet of Things. These are installed in watches, jackets, wristbands or other wallet enabled devices like smart car’s computers, smart fridges and more
  • IoT based wallets operate with e-money and virtual currencies

What are the Benefits of e-Wallets or Digital Wallets?

Digital wallets are highly used to make everyday transactions along with an added perk of transferring funds from one wallet holder to another wallet holder. One of the most well-known payment platforms is Paytm, known for transforming the habits of spending money. The brand has integrated a digital wallet into its application to let users make transactions of any amount (t & c) at any given point in time. Because of the ease and flexibility of making transactions, currently, over 3 million active users use Paytm digital wallet monthly. The following reasons showcase the benefits of Paytm digital wallet or Paytm Payment wallet-

  • Users can use a Paytm digital wallet to make payments anytime and from anywhere across the country
  • A user is required to add the required amount to the wallet to make transactions
  • There is no penalty charged on a low or minimum balance in the wallet
  • Paytm digital wallet safeguards the user’s information and the transactions made through it
  • Paytm digital wallet or Paytm payment wallet can be used either by scanning the QR code available at POS or available with the merchant or add a mobile number to complete the transaction
  • There is no restriction on using the digital wallet. One can use it as long as he/she requires it
  • Paytm digital wallet processes the transactions within seconds
  • Paytm payment wallet can be used to make minimum to a maximum amount transaction
  • There is no cost levied on a user to use a Paytm digital wallet

Final Call

There are various types of digital wallets or e-wallets that fulfil specific purposes and thus, they are developed accordingly. Generally, digital wallets or e-wallets are integrated into payment applications; however, they can be downloaded directly as e-wallets from an authorized platform. It is always advised to download either the payment application or e-wallet from the authorized platform or from Google Play Store or Apple App Store. It is highly recommended never to download e-wallet or payment wallets from any third party app or website.

FAQs
Which is the best e-wallet to use?
Paytm e-wallet is best to make daily transactions at merchants or online. All a user requires is to add the desired amount to the Paytm wallet from any of the linked bank accounts, scan a QR code that is available with the merchant or use it for online transactions easily.
Will I be getting cashback by using Paytm digital wallet?
Both Paytm cashback and Paytm cashback points can be collected by using Paytm e-wallet (t & c apply).
From where should I download the Paytm application?
Download the Paytm application from authorized platforms like Google Play Store or Apple App Store.
Do I need to pay an amount to create a Paytm e-wallet?
No, Paytm does not ask for any additional fee or charges to create Paytm e-wallet.
How much amount should be added to the Paytm e-wallet?
Users can add the desired amount to their Paytm e-wallet from any of their linked bank accounts. Another feature added into the Paytm e-wallet called ‘Automatic add money’ offers the flexibility to automatically add money to the wallet whenever the amount reaches the balance last limit.
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