Posted on: January 2, 2017

UPI or Mobile Wallet — Which One to Go for?

Mobile Wallet

India today is witnessing one of the biggest surges worldwide in the demand for mobile wallets. The cash crunch following the demonetization announcement by the government, has led to close to 1 million new mobile wallet users. While popular mobile wallets like PayTM have gained the most, Unified Payment Interface or UPI, introduced in April last year, has been a slow mover so far. However, reports suggest a revamped UPI platform will be launched in 2017 with an aim to acquire a larger user base.

Here is how UPI and mobile wallets fare against each other.


UPI is a payment system that allows users to transfer money from one account to another through a smartphone. The customers can pay directly from their bank account to both online and offline recipients. Customers have to just download the UPI app, set up a virtual payment address (VPA) and its mobile banking PIN (M-PIN). It also eliminates the trouble of typing card details, IFSC code, account number and internet banking passwords. All that you have to do is type-in the payee’s VPA and the amount, and the transaction is completed within few seconds..


UPI allows customers to transfer Rs. 1 lakh per transaction, which by itself is more than the transaction limit of any available mobile wallet.

Customers can add multiple bank accounts in a single app. It means that users do not have to access different banking apps for receiving or transferring the payments. This saves a lot of time and effor.

UPI works on a real-time basis and is available 24/7. There are no restrictions attached to UPI payments such as holidays or timings. Users can transfer money anytime in the day and throughout the year.

The flexible nature of UPI also allows banks to build their own specific user interface. It happens because of it being an open architecture platform.

Although, National Payments Corporation of India (NPCI) will charge the member banks for the transactions, most banks are offering the service for free now. The only limitation with UPI is its availability. Right now, it is only available for Android users but it will be available for Apple and Windows users as well shortly.

Mobile Wallets:

Mobile wallets helps you to perform activities that are possible with any physical wallet, store your money in it and pay from it for shopping, paying utility bills, buying groceries etc. However, users cannot transfer the money loaded into their mobile wallet accounts to mobile wallets of other service providers. Also, mobile wallets do not allow you to make transactions of more than Rs. 20,000 per month (in case of non-KYC accounts) and though most of them do offer additional benefits in the form of discounts and cashbacks.


With mobile wallets, users can link their credit/debit cards and be free from the trouble of entering details and PIN every time. They can make any payment at any time.

Mobile wallets eliminate the need of searching for change and users can transfer the exact amount of money into the receiver’s digital wallet.

These wallets are extremely useful for places or market segments, such as small tea stalls, street food joints, vegetable and fruit vendors where the transactions are very small in value but frequent. Some wallets also provide split bill facility, which allow the users to split their bills. Some wallets also provide cash pick-up/deposit facility to their users.


To sum it up, UPI scores over m-wallets in terms of transaction cost and upper limits on transaction amount. Moreover, using UPI saves you from forgoing interest income. Unlike mobile wallets, which have been forbidden from paying interest on your balance, UPI directly fetches the money from your bank account. However, mobile wallets outscore UPI in terms of acceptability and customer benefits like cashbacks and discounts.

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