Introducing Open, Closed, and Semi-Closed Systems in India’s E-Wallet Landscape

In the dynamic Indian payments industry, e-wallets have remarkably transformed the country’s payment landscape. The rise of e-wallets has revolutionized

types of e wallet

In the dynamic Indian payments industry, e-wallets have remarkably transformed the country’s payment landscape. The rise of e-wallets has revolutionized how transactions are conducted, leading to a profound shift in India’s entry payment economics.

The exceptional growth and adoption of e-wallets in India are evident from the staggering numbers. In FY 2021, e-wallet transactions amounted to a whopping ₹1520.65 billion, showcasing the increasing reliance on digital payment solutions. This surge in e-wallet usage can be attributed to factors such as growing smartphone penetration, improved internet connectivity, and the convenience these digital wallets offer.

Looking ahead, the future of e-wallets in India appears exceedingly promising. Projections indicate that the e-wallet market will soar, with an estimated value surpassing USD 429.2 billion by 2027. This forecast underscores the immense potential and sustained growth trajectory of e-wallets in the Indian market.

The Payment Paradigm: Are E-Wallets Leading the Way?

E-wallets have undoubtedly emerged as pioneers in a payment paradigm shift, revolutionizing transactions, and reshaping consumer behaviour. These digital payment solutions have disrupted the traditional payment landscape by offering unparalleled convenience, security, and versatility. 

In India, the government has played a proactive role in promoting the adoption of e-wallets through initiatives like the Digital India campaign and the Unified Payments Interface (UPI) implementation. These initiatives have created a robust digital payments infrastructure, facilitating seamless and instant transactions nationwide. As a result, more individuals are embracing the convenience and efficiency of e-wallets for their daily financial needs.

Furthermore, e-wallets have played a pivotal role in accelerating the transition toward a cashless society. With the expansive adoption of mobile devices and increased internet penetration, e-wallets have become the preferred payment method for various transactions, be it online shopping, bill payments, peer-to-peer transfers, or in-store purchases. E-wallets have made transactions faster, more secure, and more convenient for users by eliminating the friction and inefficiencies associated with traditional payment methods. 

Additionally, these digital payment solutions have significantly contributed to financial inclusion by bridging the gap between financial services and the unbanked. E-wallets have provided previously marginalized individuals access to essential financial transactions, enabling them to participate in the digital economy and experience the benefits of a connected financial ecosystem.

Let us find out what an e-wallet is!

Understanding Digital Payment Methods: Decoding E-Wallets

An e-wallet, also termed a digital wallet, is a software-based alternative to a physical wallet used for carrying cash. It offers an array of functions and features beyond traditional cash storage. Whether it’s paying for goods or services at online stores or making purchases at physical point-of-sale (POS) locations, e-wallets provide a seamless and convenient payment experience.

One of the primary features of an e-wallet is the ability to deposit money into a virtual wallet. Users can add funds to their e-wallets through methods like bank transfers, credit or debit card payments, or even receiving funds from other users. These funds are securely stored within the digital wallet, ready to be utilized for electronic transactions with the help of the internet.

It’s important to note that e-wallet transactions typically have certain limits in place, such as a maximum transaction amount. In India, the current maximum limit per transaction for e-wallets is ₹2 lakhs. This limit helps prevent fraudulent activities and ensures responsible usage of the digital payment system.

E-Wallets: The Ultimate Game-Changers for Digital Payments 

1. Convenience – E-wallets eliminate the need to carry physical cash or cards. With just a few taps on your smartphone, you can complete transactions effortlessly, whether shopping online, paying bills, or splitting expenses with friends.

2. Speed – E-wallets offer swift and instant transactions. Whether you’re in a store or making an online payment, the rate of e-wallets ensures that you can complete your transactions quickly, saving you valuable time.

3. Security – E-wallets employ robust security measures to protect your financial information. Encryption, multi-factor authentication, and secure protocols ensure that your transactions are safe from unauthorized access and fraud, giving you peace of mind.

4. Cashback and rewards – Many e-wallets offer attractive cashback offers, discounts, and loyalty rewards. By using these e-wallets for your transactions, you can enjoy financial incentives that make your purchases more rewarding.

5. Track and manage expenses- E-wallets provide a convenient way to track and manage expenses. You can easily monitor your transactions, get insights into your spending patterns, and effectively manage your budget. This feature helps you control your finances and make informed financial decisions.

6. Merchant acceptance – E-wallets have gained significant traction among online and offline merchants. They offer easy integration options for businesses, allowing them to accept digital payments and reach a broader customer base. This increased merchant acceptance further fuels the growth of e-wallets in India.

Various e-Wallet Categories in India

Currently, in India, three main types of e-wallets are available for citizens to choose from. These are – 

CategoriesOpen WalletsClosed WalletsSemi-closed Wallets
ExamplesICICI Pocket, M-pesa by Vodafone Idea, etc.Clear Trip, MakeMyTrip, BookMyShow, etc.Paytm, PhonePe, MobiKwik, etc.
PurposeIt can be used for all transaction types.Exclusive purchases on the entity’s website by e-wallet.Buying commodities at listed merchants and locations only.
Transfer/WithdrawalTransfer and withdraw funds easily.Cannot transfer or withdraw funds.The wallet holder can transfer funds but cannot withdraw cash or redeem them.
Issuers/Developed byBanks offer on-the-go payment facilities to their customer base.Companies sell products or services to consumers.NBFCs and Fintech institutions.
PPI licence mandateA PPI licence is not necessary.RBI authorization or PPI Licence is not mandatory.Can work without a PPI licence (Not true in the case of non-bank entities and Fintechs).
Transaction typeAllows peer-to-peer and peer-to-merchant transactions.Transactions are possible only between the wallet holder and the issuer.Transactions are possible only between listed merchants. For example, transactions between PhonePe and Vodafone Idea.
FlexibilityOpen wallets provide the flexibility to link multiple bank accounts and transfer funds between them.Closed wallets often offer loyalty programs and rewards specific to the associated entity.Semi-closed wallets can provide services like mobile recharges, bill payments, and ticket bookings.
UsageOpen wallets can often be used for cash withdrawals at authorized ATMs and retail outlets.Closed wallets may offer special discounts and promotions exclusively for their users.Semi-closed wallets may allow users to load money into their wallets from various sources, such as bank accounts or cards.
Additional featuresOpen wallets can offer additional features like personal finance management, expense tracking, and budgeting tools.Closed wallets provide a seamless and integrated payment experience within the specific business ecosystem.Semi-closed wallets can facilitate easy payments at physical stores using QR codes or NFC technology.

The recent implementation of RBI’s mandate on PPI interoperability blurs the distinctions between different types of e-wallets. With this development, semi-closed wallets, for instance, have gained expanded capabilities through their e-wallet apps. Users of semi-closed wallets can now enjoy – 

  • Cash freedom – Withdraw cash from ATMs or POS locations.
  • Seamless transfers – Transfer money to self and peers, making transactions a breeze.


India’s e-wallet trio – open, closed, and semi-closed – offers diverse options for users with varying needs. Whether you desire limitless possibilities, exclusive benefits within a specific ecosystem, or versatile transactions across multiple merchants, there is an e-wallet tailored to your preferences. E-wallets have transformed how we make payments, providing convenience, security, and incentives. Fidypay continues to evolve, they will shape the future of financial transactions, making our lives simpler and more connected in the digital realm. Embrace the e-wallet revolution and embark on a seamless and exciting payment journey!

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