Digital Wallets — Mobile Wallets: Complete 101 Guide#
Last updated: March 2026
What are Digital Wallets?#
Digital wallets (Prepaid Payment Instruments - PPI) are virtual wallets that store money digitally, enabling online and offline transactions without linking to a bank account directly.
Types of Wallets#
| Type | Description | Examples |
|---|
| Closed Wallet | Single merchant | Amazon Pay, Flipkart Pay |
| Semi-Closed | Multiple merchants | Paytm, FreeCharge |
| Open Wallet | Bank-linked | PhonePe, Google Pay |
How Digital Wallets Work#
Adding Money#
- Link bank account/debit card
- KYC verification (minimum/full)
- Add money to wallet
- Start transacting
Transaction Flow#
1
| Wallet → Merchant → Settlement → Bank
|
KYC Requirements#
| Type | Limit | Requirements |
|---|
| Minimum KYC | ₹10,000/month | Mobile, email |
| Full KYC | ₹2,00,000/year | Aadhaar, PAN |
Features#
- Instant payments
- Bill payments
- Recharges
- Merchant payments
- Financial services (loans, insurance)
Consumer Rights#
- Wallet balance protection (RBI guidelines)
- Refund for unauthorized transactions
- KYC data protection
- Transparent fee disclosure