The demand for a semi-closed wallet license has been increased, and, in India, the Semi-closed...
In a bid to make the payments process fast and easy, the Reserve bank has introduced various measures. One of those measures is Prepaid Wallet or the Payment Wallet. RBI regulates the functioning of prepaid wallets in India. In this article, we shall take a look at the procedure of obtaining prepaid wallet license, but before that, lets’ have a basic understanding of Prepaid Wallets.
Prepaid wallets are methods of online payment instruments for paying for the goods and services procured and to transfer online the money from one bank to another. They facilitate the purchase of goods & services against the value stored on such instruments.
The prepaid instruments can be issued in the form of:
In India, prepaid wallets are classified into the following types:
Closed system wallet is offered by the company to its customers, which can be used to purchase on the online platform where the company operates. E.g., Myntra, cleartrip etc.
This form of wallet is used to buy goods and services and acts as a payment instrument that can be redeemed by an identified merchant that contracts with the issuer to accept the payment instrument. Eg- Paytm, MobiKwik etc.
The money stored in these instruments can be used to make payment for any purchase, and the money can be redeemed at ATM. E.g., Visa cards, master cards etc.
The following entities are eligible to obtain the prepaid wallet license:
Those banks that have the RBI approval to provide mobile banking transactions will be permitted to launch mobile based prepaid payment instruments.
A company which is incorporated under the Companies Act can get this license if it’s permitted according to the object clause of the MOA.
Such companies should be having a minimum capital as per the guidelines of the FDI policy.
The entities that fulfill the capital adequacy requirements as prescribed by the Reserve Bank will be permitted to issue prepaid instruments.
Any financial entity registered under the Companies Act 2013, with an objective of financial business seeking payment wallet authorization, should have a minimum net worth of 5 crore rupees.
Those entities that are governed under the FEMA who are authorized to issue a foreign exchange, prepaid wallets are exempted from these guidelines. The use of payment instruments will be permitted to current account transactions only, and subject to the limits laid down under the FEM (Current Account Transactions) Rules 2000.
The following steps should be followed to get the authorization to set up the prepaid payment business:
The following documents should be submitted for obtaining the Prepaid Wallet License:
The benefits of prepaid wallets include:
Prepaid wallets have become the new normal for many. In these pandemic times, an increasing extent of people are shunning the use of cash and leveraging prepaid wallets for transactions. If you wish to set up prepaid payment business, consider applying for Prepaid Wallet License to be able to issue prepaid wallets.
Read our article:Prepaid Payment Instruments– Say goodbye to your cards