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As per RBI, the amount loaded in newly launched Prepaid Payment Instruments (PPIs) during any month shall not exceed Rs 10,000
Introduction of a new type of Payment Instrument will give a momentum to small value digital payments
The Reserve bank of India on 24th December introduced a new type of semi-closed Prepaid Payment Instrument (PPI) to enhance the experience of Indian consumers and give momentum to small digital payments. This new Prepaid Instrument launched by RBI will have a monthly rechargeable limit of Rs 10,000 and can be used for the purchase of goods and services.
PPIs are payment instruments used for the purchase of goods and services that include financial services, remittance facilities, etc. against the value stored on such instruments.
PPIs are classified under three categories, those are:
Closed System PPIs: These PPIs are issued by an entity for assisting the purchase of goods and services from that entity only. Closed PPIs do not permit cash withdrawal. Since these instruments cannot be used for payments for third party services, the operations of such payment instruments don’t require the authorization of RBI. The common example of a closed system PPI is a brand-specific gift card.
Semi-Closed System PPIs: These PPIs are employed for the purchasing of goods and services that also constitute remittance and financial services. The transactions are carried out within a group of identified merchants that have a specific contractual relationship with the issuer for accepting the PPIs as the payment instruments. These instruments do not permit cash withdrawal, irrespective of whether banks or non-banks issue them. One of the examples of semi-closed PPI is the Paytm wallet.
Open system PPIs: These types of PPIs are issued only by the banks. They are used for the purchase of goods and services, and the transactions can be carried out at any merchant. Banks issuing Open System PPIs should offer cash withdrawal facilities at ATM, Business Correspondents, etc.
See Also: Fintech Report 2019
RBI’s decision of launching new type of Semi-Closed Prepaid Payment Instruments (PPIs) aims at giving impetus to small value digital payments and enhancing the user experience. This launch of PPI is another step of government to increase the use of the digital payment, and consequently, digitize the Indian economy.RBI-Unveils-New-type-of-Semi-Closed-Prepaid-Payment-InstrumentsPPIs-1