Many people use Semi-Closed E-wallets to perform their transactions.
Though these do not allow cash withdrawal or redemption, they can be used for various purposes like paying utility bills (electricity, water bills, etc.). They can be used to pay for your purchases from the merchant sites that have a specific contract with the issuer of such e-wallet.
The examples include: PayTm, MobiKwik, Freecharge, Oxigen wallet, PayU, Airtel Money, etc.
Important things to know about Semi-Closed E-wallets:
- Semi-closed e-wallets are online prepaid accounts, which can be used to pay for goods and services at select merchant locations that have tie-ups with the e-wallet issuing company.
- The owner of the semi-closed e-wallet is not allowed to redeem or withdraw cash from the wallet and is required to use the credit to make online payments.
- The money is kept in an escrow account (temporary account) with a bank and the customer does not earn any interest on this money.
- Other than banks and non-banking financial companies, all entities are allowed to issue only closed or semi-closed e-wallets to customers.
- The customer must fulfil KYC requirements depending on the value of transaction. For payments of Rs 20,000 and above from the e-wallet, a KYC verification process needs to be completed.
- While balance in such PPIs cannot exceed Rs 20,000 at any point of time, the merchants can transfer funds from such PPIs to their own linked bank accounts up to Rs 50,000 per month, without any limit per transaction.