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For the past few years, many payment modes have been introduced and approved by RBI, which has facilitated the purchase of goods and services. One such technological development is the Prepaid Payment Instruments (PPIs). One of the biggest features of this form of instrument is that value is already stored in these instruments. Some of the examples of PPIs in India include paper vouchers, prepaid smart cards, online wallets etc.
This article discusses the various types of prepaid instruments in India.
Prepaid Payment Instruments or commonly known as PPIs, are instruments that facilitate the purchase of goods and services, enable remittance facilities, the conduct of financial services etc., against the value that is stored in them. These PPIs are generally issued by the banks or non-banks where banks need to take approval, and non-banks need authorisation before issuing such PPIs. PPIs come in various forms such as mobile wallets, smart cards, vouchers, magnetic chips, payment wallets etc.
Under the earlier Master Direction on Issuance and Operation of Prepaid Payment Instruments of 2017, the Reserve Bank of India (RBI)[1] had classified prepaid payment instruments into three types, viz.
The above system of PPIs was found to be hampering interoperability and harmonisation amongst various PPIs. As a result, RBI came out with a new set of Master Directions on Prepaid Payment Instruments of 2021, laying down fresh eligibility criteria and conditions of use for payment system operators that are involved in the issuance and operation of Prepaid Payment Instruments.
Following is the latest categorisation of Prepaid Payment Instruments according to the Master Directions of 2021:
Some specific categories of PPIs have been made, such as
From the above discussion, it can be concluded that there are primarily two types of Prepaid Payment Instruments. However, RBI has created special categories where two more types of Prepaid Payment Instruments have been added viz. Gift PPIs and PPIs for Mass Transit Systems. In order to protect the holders and acceptors of PPIs from potential fraud and exploitation, RBI has made it necessary for the PPI issuer to state all the T&C for the usage of PPIs in clear and simple language.
Read our Article:All you need to know about Pre-Paid Instruments
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