The Brazilian is set for a switch to Serie A on a temporary deal but Jose Mourinho will not allow the Italian club to have an option to buy the full-back at the end of the season
Inter are closing in on a loan deal for Chelsea's Brazilian full-back Wallace.
Jose Mourinho confirmed during the club's pre-season tour of Asia that the 19-year-old will be sent out on a temporary move for the season as he will not obtain a work permit to remain in the Premier League.
Wallace's representatives held talks with with the Blues on Tuesday as they attempt to seek a resolution that would allow the youngster to make the switch to Serie A.
Mourinho, however, has stressed that there will be no option to buy Wallace at the end of the season, despite the Italian club being keen to obtain a clause in the loan deal which would allow them to make the move permanent.
Inter boss Walter Mazzarri has been a long-term admirer of of the right-back and considered a move for the Brazilian during his reign as coach at Napoli.
Wallace, who has also been targeted by Roma, was signed by Chelsea from Fluminense in December 2012 but has remained in Brazil until he linked up with Mourinho's side for their pre-season campaign earlier this month.
The defender made his first appearance for the club in the 1-0 victory over Singha All-Stars earlier in July, winning the penalty that Romelu Lukaku converted to give the Blues the win.
Despite featuring prominently during the west London side's tour of Asia, Wallace was not included in the 25-man travelling party to the United States to take part in the Guinness International Champions Cup.