Virtual currency

Virtual currency is a set of coins, gems or credits that people buy with real money and can spend only inside one app: on items in a game, on gifts for a live-stream host, or to unlock the next episode of a story. The coins have no value outside the app, and in most apps they cannot be changed back into rupees.

Here is how it works in general. The app sets its own exchange rate, and sells coins in packs. For example, it may sell 100 coins for ₹80 or 1,000 coins for ₹650, with more coins per rupee in the bigger packs. The user pays through the phone's app store, by UPI or by card. The coins are added to the user's account in the app. The user then spends them on items or actions, each priced in coins rather than in rupees. The app keeps a record of every coin bought and spent. When the app store handles the payment, it keeps a share, often between 15% and 30%.

Why use coins instead of rupees? A small price in coins feels less like spending money. A user who buys a pack usually has coins left over, which brings the user back to spend them. And one price list in coins works in every country. Coins also hide the real price of each item. The payment screen shows the price of a coin pack in real money, but items inside the app are priced only in coins. So consumer authorities in the European Union have asked games to also show the real-money price of items sold for coins.

Take, for example, a teenager who wants a new character in a mobile game. A game top-up website sells the game's own currency for UPI payments, and the coins appear in the game within seconds.

Consider a viewer watching a singer on a live streaming app. The viewer spends coins on a virtual rose, and the app pays the singer part of its value in rupees, keeping the rest.

Say a viewer is following a drama told in one-minute episodes on a micro-drama app. The first episodes are free, and each later episode costs a few coins.

How is virtual currency different from money in real-money gaming? In a real-money game, players stake money and can win money back. India's Online Gaming Act 2025 bans such games. Virtual coins are bought but never paid out, which is why social casino games use them. Virtual currency is also different from cryptocurrency, which can be traded outside any one app, and from loyalty points, which a customer earns by buying, rather than buys.