E-wallets have increasingly replaced other modes of online payments offering a secure and easy payment mode. With e-wallets, not only are the payments cashless, but come with no added risk of any data theft upon using your net banking or cards.

Anyone can make use of e-wallet services for online payments as well as for offline services like payments for your taxi ride or even at a salon.

Mobile wallets & their types

Mobile wallets are broadly classified as either open, closed, or semi-closed.

Open wallets allow you to buy goods and services along with the option of funds transfer to other bank accounts like NEFT. Open wallets are usually offered by banks or private wallet companies in collaboration with a bank. Semi-closed and closed wallets on the other hand do not allow you to transfer funds through them at any point of time, but only to make payments with the amount loaded in it.

People without bank accounts can use semi-closed wallets by loading money into it through over-the-counter transactions using an MPIN. They can this to buy goods and services from anyone who accepts wallet payments, while closed wallets allow you only to shop with one fixed merchant or service provider with whom it has a tie-up. However, wallets charge a small percentage of the money loaded, ie, around 1-2% as their service fee.

Semi-closed e-wallet

Semi-closed wallets, as the name suggests, offer a limited two-way flow of money from your e-wallet account. You can use the money in your e-wallet on various other third party merchants, including both offline and online purchases and bill payments. The only condition is that the merchant must have a tie up with your mobile e-wallet service company. MobiKwik, Paytm, PayU, and Airtel Money are some of the well known semi-closed mobile wallets popular today.

Here are some intrinsic features of semi closed e-wallets that you should be aware of before signing up.

Once you add funds to your semi closed e-wallet, you cannot transfer or withdraw the cash from the wallet. You can only use the money to make payments for various services like bill payments or to make online shopping payments. Do not park huge sums of money in a semi-closed e-wallet as that would mean blocking your liquidity.

Know the amount of online bills and payments that you need to pay each month and load your wallet accordingly. Semi-closed wallets, like other wallets, cannot be used at outlets. Depending on your mobile wallet, you can use it only on websites or with merchants that have tie-ups with the mobile wallet service provider.

Before you choose a mobile wallet, compare the number of merchants and websites that have tie-ups with the mobile wallet company. The money you add to your mobile wallet is kept in an escrow account and used for your online payments. Hence, you will not earn any interest on the money kept.

Mobile e-wallets operate under RBI guidelines. As per the current regulations, you will need to furnish your KYC documents if you plan to hold more than R10,000 in your mobile wallet in any point of time.

Using e-wallets can be easy as you don’t need to enter your bank details every time when you make a purchase. Make sure you know the features and details of a semi-closed wallet before opting for one.

The writer is founder and CEO , BankBazaar.com