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In India, currently in the area of non-cash transactions, the demand for e-wallets, Payment Wallets or Semi-Closed Wallets has increased and appears as a rising star. Semi-closed wallet license is well-regulated by the Reserve Bank of India.
A cashless economy is the main concern of policymakers, academicians, and commercial enterprises. The online transaction rate has increased at a rapid speed because of the demonetization drive of Prime Minister Narendra Modi from 15% to 65% of the overall business.
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E-wallets allow the purchase of goods and services from identified merchants, who, after entering into a specific contract, agree to accept the payment instrument with the issuer of the wallet.
These types of payment instruments do not permit cash withdrawal or redemption by the holder.
In India, for obtaining Semi Closed Wallet license, The Reserve Bank of India issues licenses under the Payment and Settlement Systems Act, 2007 for the operation of semi-closed wallets. Existing entities shall apply within three months from the date of coming into the purview of the Act.
In India, RBI issues guidelines from time to time regarding eligibility criteria and conditions for the operation of various e-wallets in the country.
RBI specified various banking and non-banking entities engaged in the issuance of prepaid payment instruments after obtaining the necessary license from the RBI, which comply with the guidelines issued by the RBI in this regard.
In Semi-closed wallets there should be a validity of six months from the date of its issuance. It is required for every entity issuing such semi closed wallets to establish a well-defined and working mechanism for customer protection.
Semi-closed PPIs through banks & non-banks would have similar features unless specified.
Prepaid Payment Instruments up to ₹10,000/- through accepting minimum details of the holder
a. Verified Mobile number by One Time Pin (OTP) and
b. Self-declaration of name and unique identification number of any of the ‘officially valid document’ defined under Rule 2(d) of the PML Rules 2005, as amended from time to time.
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