Mobile wallets started in Japan as a solution for small payments without change at gas stations and stores. They allow storing virtual money in a mobile account that can be used to pay for transactions with an SMS. In India, while some limited mobile wallet services exist, full implementation is awaiting RBI guidelines as current rules do not allow third party transfer of funds without a bank account. As mobile wallet usage grows, costs will decrease from current Indian rates of 0.8-1.5% per transaction. Widespread adoption faces challenges around customer acceptance of mobile payments and fraud prevention without direct bank involvement.