Semi Closed Wallet

Semi Closed Wallets

These are payment instruments that are used to buy goods and services by identifying merchant locations or establishments in which the issuer accepts the payment instrument. This kind of wallet does not allow you to withdraw cash. Though it allows you to transform a certain amount of wallet balance to your bank A/c. the advantage of these wallets are that they offer fast transactions and uninterrupted refunds.


Semi-closed wallet are payment tools that allow you to purchase goods and services at the listed locations, merchants or establishment. You cannot withdraw, add or redeem cash but you can transfer the virtual cash into another user’s account.

Technology has shown a massive impact in every sphere and has impacted the banking sector and therefore, it has been booming remarkably. Gradually, the real cash is taking a back seat and it has become the time of virtual cash and virtual wallet. Cash transaction has become so limited that a person chooses to only make cash transaction at the time of need and mobile wallets have replaced all the other needs of cash. Moving out cashless isn’t a reason to worry anymore because everyone has an e-wallet. Establishments like Paytm, M-Pesa, Amazon pay balance, etc are rising and outreaching the market at a greater pace.

Mobile wallets have been classified based on the kind of functionality they operate with. Some have a functionality of single point approach where the services can be availed from the issuer itself calling it to be a closed loop wallet, some offer the deposit and withdrawal of cash that is open loop and some have multiple merchants where you can pay and avail services that are semi-closed.

We will talk about the semi-closed wallet type in detail.


Some of the prime examples of semi-closed wallets are Airtel money, Mobikwik, PayU money, etc.  To know about its functionality and operations, here are some of the points about a Semi-closed wallet.

  1. These wallets do not allow customers to withdraw or deposit cash, however, the balance or virtual money can be used to avail several services like purchase goods, pay bills or book tickets.
  2. The payment companies manage the money present in the wallet by opening an escrow account in a bank. Escrow account involves a third party to carry out required transactions on behalf of the primary parties involved.
  3. To make it user-friendly and stay among the people for long, various rewards and cashbacks are offered that makes it attractive and are used by the customer.
  4. You need to store money in the wallet and keep a record of it through the payment companies’ respective mobile application.


  1. The wallet is restricted to pay the merchants or locations that have been defined by the payment company or have a contract with the payment company to accept the payments.
  2. It’s a common platform offering varied services. You can make bill payments, shop and pay at other websites, recharge, etc.
  3. These wallets have limited access to your personal information and banking details, therefore they are safe.
  4. You can put money and take it out from your account. However, you cannot withdraw it in the form of cash. The amount has to be used online.
  5. It is a wider reach and easy option where you can move cashless with no worry at all.
  6. This wallet requires minimum details for a transaction like mobile number verified with OTP and self-declaration of name and aadhar number defined under PML rules that keep changing.
  7. There is no interest earned on the money deposited in your wallet.
  8. KYC is mandatory if the transaction through the wallet crosses an amount of 10,000.


  1. Banks must seek permission/approval post clearing the eligibility criteria for issuing the Semi-closed wallets.
  2. Non-banking entities complying to eligibility criteria shall obtain authorisation from RBI to issue only semi-closed wallets.
  3. All entities under any financial regulator seeking approval or authorisation from the RBI under PSS act shall apply to Department of payments and settlement with NOC from their regulator within 45 days of obtaining clearance.
  4. The application for authorisation shall only be sent if the company is based out of India and registered under the companies act 1956 and 2013.
  5. The capital requirement of non-banking entities having FPI, FII and FDI should be met as stated in the FDI policy guidelines.
  6. The MOA must have the details of the planned activity of operating as a PPI user.
  7. At the time of application submission, the net worth of the non-banking entity seeking authorisation should be 5-crores as per the latest audit.

Semi-closed wallets is a booming industry as there is the rise in accessibility of smartphones and the internet. In addition to that, people try to update themselves and adopt the changes in lifestyle in this fast pacing world. Not only do they want to get technologically advanced but also make their lives simpler by adopting easier and faster ways of doing things.

Back to top button
Get Instant Cash Loan upto INR 2 Lakhs Quick and Easy Process