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. What are Prepaid Payment Instruments (PPIs)? 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 Notable Features of Newly Launched Prepaid Payment Instruments by RBI RBI introduced a new type of Prepaid Payment Instruments (PPIs) to promote small value digital transactions and enhance the experience of Indian consumers. Following are the key features of newly launched PPIs:In order to have a PPI issued, holders would be required to furnish ‘minimum details’ to the banking and non-banking PPI issuers.The ‘minimum details’ required to issue a PPI include a mobile number verified with One Time Pin (OTP). Along with the mobile number a self-declaration of name and unique identification number of any ‘mandatory document’ or Officially Valid Document (OVD) listed in the ‘Master Direction –Know Your Customer (KYC) issued by the Reserve Bank of India is also required.These PPIs shall be issued in card or electronic form and must be reliable in nature. The loading and reloading of these PPIs will only be possible through the Bank account linked with the customer’s verified mobile number.The monthly limit of the amount that can be loaded in the PPI has been set at Rs 10,000. And, the limit for the whole financial year has been set at Rs1,20,000. The amount cannot exceed the set limit.The outstanding amount at any point of time in newly introduced PPIs shall not exceed Rs 10,000.These Prepaid Payment Instruments shall only be used for purchasing goods and services. The option of Funds transfer will not be available in these instruments.The PPI holder will be provided with the option of closing the PPI at any time as per their wish. Further, the PPI issuers will have to allow the transfer of funds ‘back to the source,’ i.e. the Bank account if the customer at the time of closure of PPI.All the features of Prepaid Payment Instruments (PPIs) should be communicated with PPI holders through SMS/ e-mail/ or by any other means at the time when PPI is issued. Take Away 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.