Home / Money / Calculators /  Difference between digital wallets and prepaid wallets

As electronic payments increase, more e-wallets are being rolled out. The latest entrant into this somewhat crowded market is Citi MasterPass, launched jointly by Citibank and MasterCard. This global digital wallet saves your card details, which lets you transact without having to enter these details every time you purchase online. It is different from a prepaid or a virtual wallet. Here’s a look at different types of wallets available.


With the MasterPass global digital wallet, you have to first register for the service on MasterCard’s website and enter your card details such as card number, expiry date, CVV and address. This information is further validated through your Citibank Internet banking password or a one-time password (OTP). Once registered, you can select “Buy with MasterPass" as a payment facility on websites that have enabled this option. When you choose this option, you will be asked to key in your Citi MasterPass ID and password, which will then populate the card details on to the online transaction. The transaction will then be authenticated through a PIN or an OTP.

Some prepaid payment issuers also offer similar digital wallets. With these, a user can only save details of cards in a digital form and use for online financial transactions; she cannot load money using these.


Many prepaid payment issuers, banks and companies offer prepaid wallets. With these you can load money and make payments.

The Reserve Bank of India has three categories for wallets—closed, semi-closed and open. A closed wallet can be used to buy goods and services exclusively from one company. Semi-closed wallets, on the other hand, can be used to buy goods and services, including financial services, at specified merchant locations, which have a specific contract with the issuer to accept the payment instruments. Open wallets can, however, be used for purchase of goods and services, including at merchant locations or point of sale terminals that accept cards, and also for cash withdrawal at ATMs or from business correspondents. These wallets can only be issued by banks. Money can be added using Net banking, and credit or debit cards. Prepaid wallets have transaction limits and validity periods.


Digital wallets and prepaid wallets serve different purposes. In case of a digital wallet, your money continues to remain in your bank account or credit card. In a prepaid wallet, the money moves from your account to either a merchant’s current account or an escrow account depending on the type of wallet. In both cases there are no additional charges attached to the wallets as of now.

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