Mobile payment generally refers to payment services operated under financial regulation and performed from or via a mobile. Mobile payment wallet also referred to as mobile money, mobile money transfer and mobile wallet.Payment wallet license or prepaid payment wallet license in India is issued by RBI. RBI is responsible for issuing guidelines and rule for prepaid payment wallet and responsible for granting the license.
RBI has Classified Prepaid Payment Wallets Into Three Categories:
- Closed system payment
- Semi-closed system payment
- Open system payment
Type of Payments Wallets in India
Closed system payment:
Closed wallet is the wallet which is issued by a company to a consumer for buying goods and services exclusively from that company. Example: Amazon, Cleartrip, etc. Such instruments do not allow cash withdrawal or redemption.
Restrictions of Close System Payment Wallet:
- The close wallet does not permit cash withdrawal or redemption.
- In case money is stored in the close wallet, it can only be used to purchase from the particular Site.
Open System Payment:
This is a type of wallet which can be used to purchase goods and services and also permit cash withdrawal at ATM. Example- Visa card, Master Card, Rupay card.
You can use the Open system payment wallet:
- For cash withdrawal at ATM
- Payment on purchase of goods and services on swiping
- Use through POs machine for making payment.
Semi-Closed system payment:
It is a wallet that can be used to buy goods and services as it is a payment instrument that is redeemable of clearly identified merchants that contracts specifically with the issuer to accept the payment instrument. Example- Paytm, Mobikwik, Freechare, etc.
You can use a Semi-Closed system payment wallet:
- Pay to the affiliated merchant for purchasing goods
- Purchase from wallet issuer
- Transfer money