What is the difference between UPI and Digital Wallet?
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
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.
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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