What is a Digital Wallet? Everything To Know and How to Choose One

Updated on: 11 Jul 2024

Using a digital wallet has made it simple to transfer funds and make online payments to a majority of merchants. These wallets are simply an extension tool to store funds, so you can make payments without carrying your physical card everywhere.

This not only increases your security but also makes one-tap payment easy. Since everyone carries their phone with them at all times, it eliminates the need to carry your wallet. Therefore, knowing all the features and benefits of a digital e-wallet is important.

Read on to know what is an e-wallet, its types, benefits, limitations, and more.

Working of E-Wallets

Knowing its working process is one way to understand the meaning of an e-wallet. As per the definition, these are applications or software-based systems that facilitate payment, fund transfers, bill payments, online booking, etc.

To use these apps, you need to connect your debit card, bank account or credit card with the app. Mobile wallets replace physical wallets as you no longer need to carry your card to pay the bill, as you can make payments digitally. The funds get deducted from your card or bank account.

Also Read: RBI Has Made e-Wallet Safer For Users

Types of E-Wallets

Not all mobile wallets give you free rein to make payments. If you don’t know how and where to use your mobile wallet, you may find it difficult to make payments on the app. Here are all the types of e-wallets that you need to be aware of.

Open Wallet

This type of wallet allows you to spend your money on in-app purchases and payments outside the app. Most mobile apps of banks are open wallets. You can also use this type of wallet to execute any type of transaction.

Closed Wallet

This type of digital wallet only allows you to make in-app purchases or online merchant payments. You cannot use it to send money from one account to another. One such app available in India is Amazon Pay.

Semi-Closed Wallet

This type of wallet has limited restrictions, as you can make payments at select merchants and locations. Paytm is an example of a semi-closed wallet.

Also Read: Top online UPI payment apps in India 2024

Choosing the Best Wallet

Here are some factors to consider when choosing from the wide range of digital e-wallets.

Benefits

Lowers the risk of credit card and debit card information misuse
Helpful in emergencies or to make payments if you forgot your wallet at home
All payments are tokenised to improve tracking
These apps keep a record of your past payments, which can be useful in budget management
You can get exciting deals and offers on the app to save money on every payment
It is a great option to make last-minute bill payments quickly to avoid penalties
You don’t need to maintain a minimum balance or pay additional charges

Drawbacks

They may have limited access or acceptability at select merchant outlets
If your mobile gets stolen, then the miscreant can access your bank account and credit card unless you have password protection
You need a strong internet connection to access it, which is not ideal for emergencies

Choosing from any of the digital wallet options is not a very hard decision, as they all have the best security measures in place. While you can link most bank accounts with electronic wallets, your credit card must be UPI-compliant for linking.

One option you can choose is the Fibe Axis Bank Credit Card, India’s first UPI-enabled numberless metal credit card. When using a digital wallet for UPI payments, you can earn up to 3% cashback with every purchase. That’s not all. It comes with a plethora of other perks.

This includes complimentary airport lounge access at domestic airports and a 1% fuel surcharge waiver on transactions of up to ₹5,000. It is also a lifetime free credit card, so you can save more money without having to pay annual and joining fees. So, download the Fibe App to get this card right now!

FAQs on Digital Wallet

How do I open a digital wallet?

To open an e-wallet account, download your chosen app from the Google Play Store or App Store and register with your credentials. With OTP verification, your registration is complete. Then, the next step is to link it to your bank account, for which you will get the instructions on the app. Once done, you can load money into it and pay for any purchase.