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What is E-Wallet?

What is E-Wallet?


E-wallet or digital wallet basically refers to a prepaid virtual wallet used for making online transactions including purchase something at a store, through a computer or a smartphone. An individual by registering his name can create an e-wallet profile with the service provider.

The individuals who have registered for e-wallet have to link their multiple credit card and bank account numbers in the registered e-wallet. The information provided at the time of registration will be in a secure environment and eliminate the need to enter in account information while making the payment all the times. With separate profiles for each debit and credit cards or bank accounts that are linked to the wallet account, the wallet holder can edit or delete these profiles as needed. After creation of e-wallet profile, the holder of wallet will be allowed to upload requisite amount through linked bank account/credit card/s. In the process, the wallet holder will also be able to see the available e-wallet account balance and top up the money from any of the linked accounts to the wallet. Such preloaded amount available in e-wallet can be used for multipurpose like making bills payments, booking railway/airlines ticket or to buy a range of products online. The wallet holder, for making payment on items purchased, shall enter the transaction password on the payment page of his computer/mobile app and also enters the amount payable. The amount will be debited from e-wallet account and redirected to the confirmation page. On confirmation, payment will be automatically made to the seller/service provider without divulging account information of the purchaser. The service provided by all the e-wallets are not similar, there are different types of e-wallets. Following types of e-wallets are generally seen in India.

Company specific e-wallet: These types of wallets are generally issued by business establishments for their customers who frequently use their services. Examples of these types of closed e-wallets providers are Indian Railways, taxi services like Uber, Ola, Meru cab, telecom companies, and online portals such as Flipkart, Amazon, Zabong, etc.

Generic online e-wallet: These wallets enable the holders to buy goods and services, at certain identified merchant locations/establishments. The e-wallet service provider will have a tie-up arrangement with merchant establishments to accept the online payments made through their e-wallet. (Examples of these types of service providers are PayTm, Freecharge, MobiKwik, Oxygen, Y Pay cash etc.)

Bank Wallets: Bank wallets are mainly used for financial transactions. Examples: The SBI Buddy – a mobile wallet in 13 languages can be used for transfer of money to other wallet users and bank accounts. The ICICI bank M-Pese e-wallets are used for multipurpose payments including withdrawing money. The Axis bank issues a special type of e-Wallet which can be used only for one transaction. Such e-wallet is valid for 48 hours. If the transaction does not take place within 48 hours, the money is returned to the linked bank account and the e-wallet is automatically deactivated.

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