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How to Apply for Mobile Wallet RBI License in India?

Narendra Kumar

| Updated: Aug 24, 2017 | Category: Prepaid Wallet License, RBI Registration

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If you are fin-tech startup and willing to mobile wallet RBI license, Government has published new regulatory norms for PPI license. in this article, we will discuss the Mobile wallet license requirement as well the business flow of mobile wallet.

What is Mobile Wallet?

A mobile wallet is a process or way in which no plastic cards are used, i.e., debit card or credit card. In this way, all the information’s debit card and credit card are carried in a digitalized form. Mobile devices, i.e., smart phones, tablets, smart watches are used for making payments. In this process, the money is collected and retained by the entity, i.e., the particular application which you are using for making the payment and the same money is paid to the merchants who are the part of this acceptance.

It is an application which is either in built or needed to be installed on smartphones. It is a type of storage container which stores the debit card or credit information.

In some words, it can be understood as the process by which payment is made digitally without using the cash. 

How Does the Mobile Wallet Work?

After the application is installed/stored on your smartphone and the user of the application enters his payment information, this wallet will store this information by linking a personal identification format of the card holder. This application uses the technology known as Near-Field Communication (NFC), this technology uses the radio frequency that communicates between the devices.

Not all devices use this technology, i.e., Near Field Communication but for them, there are some other alternatives. The main benefit of using mobile wallet is that the disadvantage with debit cards and credits cards, i.e., of being stolen is not with the mobile wallet, and also the payment time and wait time can be reduced if the transaction is done through mobile wallet application.

For using a mobile wallet and making payment the user has to first load the money in the wallet through internet banking or your debit card or credit card. 

Background of Mobile Wallet:

The Mobile Wallet service took place in 2006 in India, but it was boosted in the year 2016 during the time of demonetization. The Government of India is also aiming to make the society cashless, and this is one of the steps towards the same.

Services offered by Mobile Wallet:

  • BALANCE Enquiry.
  • Passbook/Transaction History.
  • Accept Money
  • Pay Money.
  • Manage Profile.

Types of Prepaid Payment instrument: 

Prepaid payment instrument can be classified under the four categories:

  1. Closed system payment instrument.
  2. Semi-Closed system payment instrument.
  3. Open system payment instrument.
  4. Semi-open system payment instrument.
  • Closed system payment instrument: It is issued by the business establishment. It can be used in the business establishment only.
  • Semi-closed system payment instrumentThey are the instruments which are redeemable at a identified merchant locations which have already entered into a contract with the issuer to accept the payment.
  • Open system payment instrument: It is the instrument which can be used for the purchase of goods and services. But this instrument allows withdrawing the cash.
  • Semi-open system payment instrument: These are the instruments which can be used at the merchant locations for purchase of goods and services. But these instruments do not provide cash withdrawal.

Entities which are required to take Reserve Bank of India Approval for I the use of such license:

  1. Entities which are using closed payment system instrument are exempt from taking RBI approval.
  2. Entities which are authorized under FEMA to issue foreign exchanges are exempt from guidelines of RBI ( but some restrictions are provided for the same)
  3. Mobile Prepaid Instrument: Mobile Prepaid Instruments are exempt from the purview of the guidelines, subject to the following conditions:
  • In addition to talk time-value, he uses of such prepaid instrument shall be restricted to the purchase of only such value added digital contents/services which are for use on the mobile phones.
  • The use of mobile prepaid instruments for purchase of any other goods or services shall not be permitted.
  • Encashment of such prepaid instruments shall not be permitted.

Who can Issue Prepaid Payment Instrument?

RBI has specified some requirement which is required to be fulfilled before issuing prepaid payment instrument, those requirements are:

  • Banks and Non-Banking Financial Companies which have complied with the capital adequacy requirement of the RBI.
  • In case of all other entities having minimum net owned funds of Rs. 10 Lakhs. 

The requirement of RBI to be fulfilled are:

  1. A necessary system should be put in place to comply with the guidelines relating to Know Your Customer/Anti- Money Laundering/ Combating Financing of Terrorism as provided by RBI.
  2. The use of the prepaid instrument for cross border transactions shall not be permitted.
  3. The maximum value for prepaid value can be Rs. 100,000 where no specific limit has been provided.

Who is Eligible to Hold Mobile Wallet?

Any individual who is over the age of 12 years is eligible to hold the Mobile Wallet account.

Kinds of Mobile Wallet Account:

  1. Basic Mobile Wallet Account: This account can be operated as soon as you install the application on your smartphone and sign up for the same. This account allows you to load and spend Rs. 20,000/- per month.
  1. The full KYC Account: This account is an upgraded version of Basic account this can be operated only after completing the KYC Details and submitting the required documents. This upgraded version will give you following facility:
  • Without ATM withdrawal facility: Instant limit of Rs. 1, 00,000 and Spend Limit of Rs. 5, 00,000.
  • With ATM withdrawal facility: Instant limit of Rs. 50,000 and a monthly spend limit of Rs. 3, 00,000.

How Can You Get the Mobile Wallet Card?

Mobile Wallet Card can be obtained by following two methods:

  1. The card can be obtained by directly ordering from the application. Go the card section and go to the Physical card option.
  1. The card can also be obtained from retailers. 


  1. If you use your Mobile Wallet Card, you will be charged Rs. 24 per ATM withdrawal transaction.

Merits of using Mobile Wallet:

  1. As in the case of wallet it can be snatched, misplaced, stolen but this is not in case of mobile wallet as it is safe as compared to keeping the physical wallet.
  1. As if you are paying in cash there is always a problem if the amount you have been charged is in round off you have to roam for asking change, but the case is not similar in case of mobile wallet even the bill is in paisa you can pay for the same.
  1. As in case of internet banking, you have to fill several details before making the payment, but in case of mobile wallet, just one click is enough to make the payment.
  1. When you are using net banking, debit card or credit card, you are disclosing your confidential data with the merchant site, but this is not in the case of a mobile wallet.

 Demerits of using mobile wallet:

  1. People who are friendly with technologies can only use this application.
  1. People having internet connection can use this service.
  1. Currently, there is only limited number of merchant registered for providing this facility, so you have to use a debit card or credit card.

There is a limit on the amount you can spend or deposit from your mobile wallet which is one of the biggest barriers.

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Narendra Kumar

Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.

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