What is the difference between UPI and Digital Wallet?

What is the difference between UPI and Digital Wallet?. UPI transaction takes place directly from bank to bank and digital wallets act as an intermediary.

Raju

Unified Payment Interface (UPI) transaction takes place directly from bank to bank. In contrast, digital wallets act as an intermediary between bank accounts.

There are many ways of online payment and money transfer. UPI and Digital Wallet are among them. However, many people do not understand the difference between these two. Unified Payment Interface i.e. UPI where there is a means of instant money transfer between two bank accounts. At the same time, digital wallets like Paytm and PhonePe have to put money before digital transactions. Come, let’s know some more important things about these two here.

What is the difference between UPI and Digital Wallet

E-WalletUPI
Transaction CostNilNil
Transaction LimitNon-KYC Verified Users can hold up to Rs 10000; up to Rs. 1 Lakh for verified usersBetween Rs 1 to Rs 1 Lakh Per Day
Transfer to Individuals/companiesPossible but depends on whether the wallet is open, semi-closed or closedYes
Payment at a physical storeYes but Very Few allow thisYes
Online PaymentsYesYes
Cash Back/ DiscountsYesNo
Request for PaymentVery few have this featureYes

1. Unified Payment Interface (UPI) transaction takes place directly from bank to bank. In contrast, digital wallets act as an intermediary between bank accounts. These wallets play the role of the bridge in the transfer of money from one account to another.

2. UPI uses virtual payment address and identity. While digital wallet uses your mobile number.

3. In UPI, limit of 1 lakh per transaction has been kept. At the same time, in case of transaction from wallet, if the customer has not had KYC, then it is Rs 10,000 in a month.

4. UPI transactions can happen between any two banks. In contrast, digital wallet transactions take place between two accounts in the same digital wallet app. This means that both the money transfer and the recipient should have this app.

5. UPI facilitates future transactions. At the same time, the digital wallet does not have this kind of facility. It is mainly used for instant transactions. That is, you immediately transfer money from it immediately.

UPI Vs Digital Wallet

Contents of this page courtesy the Center for Investment Education and Learning (CIEL). Contribution of Girija Gadre, Aarti Bhargava, and Labdi Mehta.

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Raju

Raju Choudhary is a Product Manager, passionate about technology and innovation. Having a background of commerce, he also loves to lead people with his easy going interaction. Loves travelling, reading and sports which make him upto date always.

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