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The Reserve Bank of India (RBI) has released Master Directions on Prepaid Payment Instruments (PPIs), 2021, by a notification dated August 27, 2021. All Prepaid Payment Instrument (PPI) Issuers and System Participants are subject to the MD-PPIs requirements. Banks and non-bank organizations often issue PPIs after receiving RBI approval/authorization under the PSS Act, 2007.
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PPIs are issued in the nation by banks and non-bank companies after getting the appropriate approval/authorization from the RBI under the Payment and Settlement Systems Act, 2007 (PSS Act). The current instructions issued on the subject so far have been integrated and are consolidated in these Master Directions, taking into account the changes in the sector and the progress made by Prepaid Payment Instrument (PPI) issuers.
The Master Direction establishes the eligibility requirements and terms of service for Payment System Operators (PSOs) who issue and operate PPIs in the nation.
Furthermore, in 2021, the Master Directions on Prepaid Payment Instruments (PPIs) were released, which included a new categorization of the instruments as well as a framework for PPI entity authorization, regulation, and surveillance. Going forward, without prior RBI approval/authorization, no company may set up and run payment systems for PPIs in the future.
Additionally, to the aforementioned requirements, PPI issuers must develop a board-approved policy for PPI interoperability. Interoperability refers to a PPI’s compatibilities to work with other payment systems on a technical level. Interoperability will also be required on the acceptance side too.
In addition, the RBI exempted mass transit systems from Interoperability, whereas gifts (both banks and non-banks) have until March 31, 2022 to offer Interoperability.
Finally, Prepaid Payment Instrument (PPI) issuers must establish a comprehensive/ formal, publicly published customer grievance Redressal framework, which includes assigning a nodal officer to address customer complaints, or grievances, as well as an escalation matrix and complaint resolution turnaround times. Customers can get a Redressal for grievances with the Banking Ombudsman Scheme and the Ombudsman Scheme for Digital Transactions in the case of PPIs issued by banks and non-banks.
Read our article:How to obtain a Prepaid Wallet License in India?
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