Mobile Wallets Demystified : Eligibility, Permissions And Everything Else

Mobile wallets are making headlines these days. Domestic e-commerce companies, such as Flipkart, plan to launch a wallet soon, while a few payment gateways, such as Paytm and Mobikwik, offer semi-closed wallets already. Telecom operators also offer this facility. Internationally, too, Apple Inc. is said to be introducing an iPhone wallet on 9 September, which will have tie-ups with Visa Inc., MasterCard Inc. and American Express Co.

According to many experts, mobile wallets are going to be the next wave of change in the way people make payments.

Simply put, it is a virtual money wallet that can be used to make instant payments, same as with a physical wallet. It is an application stored in cellphones, which enables users to make payments for utility bills, book tickets, transfer money and other such transactions. It can also be used to make instant e-payments while shopping, in physical stores or at e-stores.

Three types of mobile wallets:

Types of Mobile Wallets


Only bank are allowed to issue all kinds of wallets including open wallet. NBFC’s and other persons can issue only closed and semi closed wallets.

Permission from RBI:

Entities issuing closed prepaid payment systems are not required to take the authorization from RBI, they just need to inform the RBI.

Entities issuing semi closed and open prepaid payment systems are required to take the authorization from RBI.

Law governing mobile wallets:

The Payments and Settlement Systems Act, 2007 is the primary law governing payments systems in India, with the RBI as the body to supervise related matters. Section 18 of the Act empowers the RBI to make such regulations as may be required, from time to time, to regulate payments systems in India. In exercise of the same, the RBI has laid down guidelines for the issuance and operation of Pre-paid Payment Instruments. A Master Circular consolidating all regulations on the same was notified on July1, 2014.

Other Requirements:

A company (that which is not a bank or a NBFC) seeking RBI’s authorization should have a minimum paid-up capital of INR 5 crores and a minimum positive networth of INR 1 crore at all times.

The Circular specifies anti-fraud mechanisms/standards and the level of Customer Due Diligence required based on the quantum of transactions involved. KYC norms and Anti Money Laundering norms, as relevant would continue to apply to pre-paid instruments. Importantly, these regulations do not cover any cross border transaction and do not extend to any foreign exchange pre-paid instruments allowed by RBI under FEMA.

Submitted by Rohit Lohade co-founder at, a leading portal for startups for incorporations, registrations, tax filings, agreements etc.


  • Hi,

    If I am to issue a closed wallet for my services available through my mobile app and my website, do I need to inform RBI? How do I inform RBI?
    Also, is it just an information that we give to RBI or is it a sort of an approval that we need to take from the RBI?


  • Hi,

    If I am to issue a closed wallet for my services available through my mobile app and my website, do I need to inform RBI? How do I inform RBI?

    Also, is it just an information that we give to RBI or is it a sort of an approval that we need to take from the RBI?

    Om Prakash Sarraf

  • I had become member of long back I had been regularly depositing money in my e-wallet. In April May my wallet had about Rs 600 to 700. At that time I had to go out of Country for six months. When I returned in November I found that M/s Airtel had deactivated my phone no. 8600199187. I tried to log in Paytm but unfortunately I had forgotten the password. I clicked the option “forgot the password”. But they sent OTP on my old phone number which had been deactivated by Airtel due to non-issuance. So I contacted M/s Paytm and informed them about my new phone number and requested them for sending OTP on my new number or on my e-mail. They asked me to prove transaction with Paytm with Bank’s statements.
    I sent statements several times but so far they have not done anything and now it appears that they have devoured my money.
    I will request each and everybody to exercise maximum caution and DO NOT KEEP ANY MONEY IN YOUR E-WALLET OF PAYtm.
    I have all correspondence and I am intending to go to necessary Court of Law. The matter is going on since November 19 and I do not hope to get my money. My last mail is given below:

    I refer to your Ticket #115415758: regarding my account with you. and also Ticket #115415758:
    I feel disappointed to receive your reply. You are again asking me to send my Bank statements. It is really disgraceful and I never expected a site like yours would have such staff members who do not have basic common sense to understand my request. It is almost more than 15 days now and despite giving you all papers, you return to square one.
    Uday Mohan

  • I want to know is payment through toll free number – the one launched by Paytm – allowed for all digital wallets or is it a special permission granted to Paytm

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