In recent years, India's digital payment system has undergone significant transformation. With the increased use of smartphones and the government's motivation towards a cashless economy, many people have started using digital wallets and new UPI payment apps to make transactions and receive money. While both serve the same purpose of offering speedy and contactless payments, users always ask the question: Should you use digital wallets or UPI for daily transactions in 2025?
Let’s explore both payment modes, learn the difference, and help you decide which one is best for you.
What are Digital Wallets?
Digital wallets are mobile or e-wallets that help to securely store your money and manage payment information digitally. Users preload a mobile wallet with a significant amount of money and then spend it to make purchases or transfer money.
Pros of using digital wallets:
They are easy to access from your mobile device and convenient for everyone to use.
Digital wallets or UPI on wallets work very well when you have to make repeated payments to a certain merchant.
They are best if you are seeking to manage the budgeting of daily small expenses.
Users frequently get multiple rewards, cashback, and discounts when using their online wallets.
E-wallets allow users to make instant payments without wasting time.
Cons of using digital wallets:
Consistent use of smartphones and digital wallets has increased dependency on technology.
Digital wallets require wallet top-ups every time they are emptied.
As compared to UPI, digital wallets are accepted by fewer merchants.
Online wallets might impose a fee for transactions or for withdrawals.
What is UPI?
UPI or Unified Payments Interface, introduced by NPCI (National Payments Corporation of India), is an online payment system that allows users to make payments or receive money from their banks using a UPI ID. With its UPI Lite payments app, users can conveniently make small payments instantly, even in low network areas, reducing dependency on banks’ authentication.
Pros of using UPI:
Many platforms do not charge fees for using their UPI services.
UPI is pretty easy to use for everyone and is available around the clock.
Users are not required to preload the money, and transfers are done between banks.
By using UPI Lite payment apps, you can make small payments with a low internet connection or in offline mode.
UPI is widely accepted by e-commerce platforms and merchants.
Cons of using UPI:
Certain banks establish a daily limitation for UPI transactions.
With an increase in UPI payments, there might be an increased chance of cyber threats and potential fraud.
Users who do not have a smartphone can’t take advantage of UPI payments.
Which One Should You Choose?
Now that you have got a brief overview of both digital wallets and UPI, let’s understand which option will be appropriate for you:
Use UPI if:
Use UPI to pay your utility bills, recharge your mobile phone and DTH services, and make transactions using your new UPI payment app.
You want to make transactions directly from your bank account without preloading the money.
You want to make quick and safe transactions without paying any extra fees.
If you are seeking wide acceptance of online payment services.
Use digital wallets if:
You are a teenager or a user with no bank account and need a preloaded wallet for daily spending.
You want to use cashback offers and rewards on partner platforms.
Use the convenience of UPI by using UPI on wallet.
Final Thoughts
Online payments via UPI and digital wallets have revolutionised India’s payments by offering a seamless, secure, and convenient system. Reliable new UPI payment apps like Bajaj Finserv are a one-stop, user-friendly, and secure platform. With Bajaj Pay UPI and UPI Lite, you can seamlessly make payments, recharge your mobiles and pay utility bills. It offers multiple cashback offers, rewards, and exciting discounts to users, and it is linked to different bank accounts.
So, choose the best payment method that suits you the best, make smooth transactions and contribute towards a cashless economy.
