Finance Business Prepaid Wallet License

Prepaid Payment Instruments– Say goodbye to your cards


If an individual is planning to start a Prepaid Payment Instrument (PPI), obtaining Prepaid Wallet License is an absolute necessity. Prepaid Payment Instruments are methods that facilitate transactions of goods that are purchased and services availed by the consumer.

Who can issue Prepaid Payment Instrument (PPI)

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 Rs10 Lakhs.

Defining Mobile Wallets

A mobile wallet is a process in which the use of plastic cards is completely eliminated. This means that mobile wallets are a replacement of debit and credit cards. Through the wallet system, all the information that is generally in debit cards and credit cards will be stored in the database of the wallet and carried in a digitalized form. Mobile devices such as smartphones, tablets, smartwatches are great examples of making payments. As per this process, the money is collected and retained by the software in the particular application which is being used for making the payment. That particular amount which is to be paid is transferred to the seller’s account who will accept it.

Services offered by Mobile Wallets

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

Types of Mobile Wallet Accounts

Basic Mobile Wallet Account: This account can be operated as soon as the application is installed on the smartphone and the individual fills in all the required information. This account allows the individual to load and spend Rs 20,000 per month.

The full KYC Account: This account is an upgraded version of the basic account this can be operated only after completing the KYC Details and submitting the required documents.

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The upgraded version provides the following facility:

  • Without ATM withdrawal facility: Instant limit of Rs1, 00,000 and Spend Limit of Rs5, 00,000.
  • With ATM withdrawal facility: Instant limit of Rs50,000 and a monthly spend limit of Rs3, 00,000.

What are the three categories of Prepaid Payment Instruments (PPI)?

  • Closed Prepaid Payment Instruments
  • Semi-Closed Prepaid Payment Instruments
  • Open Prepaid Payment Instruments
  • Semi-open system payment instrument

Closed Prepaid Payment Instruments or Closed wallets

These types of instruments are usually issued by entities which may include individuals, sole-proprietorships, partnership firms etc. These are majorly used for the purchase of goods and services from that particular entity only. As these instruments cannot be used for making payments for third party transactions and to other entities, the issue and operation of this type do not require any approval from the Reserve Bank of India.

Semi-closed Prepaid Payment Instruments or Semi-closed wallets

This category of PPIs can be used for the purchase of goods and services from a group of merchants that join hands for this purpose only. In Semi-closed wallets, Cash withdrawal and redemption is not permitted by the holder of such instruments. RBI approval is a must before starting this type of business. Thus, all entities including individuals as well as NBFCs will be permitted to undertake the business of semi-closed wallets after obtaining a license from Reserve Bank of India.

Open wallets

This is a type of wallet which can be used to purchase goods and services and also allow cash withdrawal at ATM’s. These wallets can be used for the purchase of goods including financial services such as funds transfer from the merchants, cash withdrawal at automated business operators. All Visa and Master cards are a great example of open wallets. Only banks are authorized to issue and operate open-wallets.

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Minimum Capital Requirements for Prepaid Payment Instruments (PPI)

From the Banks

There is no separate capital requirement prescribed for Licensed/Scheduled Banks or NBFCs registered with Reserve Bank of India (RBI). They must be authorized to issue the PPI after obtaining approval from RBI.

For other entities

A minimum net-worth of 25 crores is required as per the last audited Balance Sheet which shall be maintained by all entities.

Conditions for the issuance of PPI

  • The validity of the instruments must be a minimum of 3 years.
  • Instruments cannot be reloaded.
  • Full KYC of the purchases of the instruments will be maintained
  • The maximum value of such instruments should not exceed Rs. 50000
  • The issuer must maintain the details of the persons to whom the instruments are issued.

Prepaid Wallet license eligibility requirements

The issuance of the prepaid wallet license in India depends on the type of entity.

  • Licensed / Scheduled Banks and Registered Non-Banking Financial Companies (NBFCs) must obtain authorization from the Reserve Bank of India(RBI)
  • Newly incorporated entities are required to submit a certificate from their chartered Accountantsmentioning the current net worth along with the balance sheet.
  • Applicant companies having FDI/FII are required to apply for the license as per the minimum capital mentioned in the Consolidated FDI policy guidelines.
  • STEP 1

The first step is setting up the company as per the Companies Act, 2013 by filing an application through the Registrar of Company.

  • STEP 2

Application filing for the approval in Form A as mentioned in Regulation 3(2) of the Payment and Settlement System Regulations, 2008. Fees is to be paid to the Reserve Bank of India for the grant of License. Documents are to be submitted at this step.

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Documents required for acquiring Prepaid wallet license

  • Name and other important details of the applicant
  • Constitution of applicant
  • Address proof of the registered office
  • Certificate of Incorporation
  • Primary business activity of the company
  • Information about the management of the company
  • Statutory auditor of Company
  • Audited balance sheet
  • Name and addresses of bankers of the company
  • Other necessary documents as required
  • STEP 3

The screening process is conducted by RBI to ensure that the applicants are fulfilling all the criteria and are eligible.

  • STEP 4

The next step is to meet the eligibility criteria for which Reserve Bank of India(RBI) issues an ‘in-principle’ approval. The validity of in-principle approval issued by RBI will be six months from the date of granting the in-principle approval.

  • STEP 5

The company is required to submit a System Audit Report to RBI within six months. If the company fails to submit the report, the in-principle approval will lapse automatically. The entity can take a one-time extension of six months by making an appeal in writing in advance with valid reasons.

  • STEP 6

The last step is when the applicant waits for approval. The final approval is granted to him after final evaluations. The business is required to start within six months after securing the Certificate of Authorization.


Prepaid Payment Instruments (PPIs) are devices that streamline payments of goods and services when individuals do not have enough cash with them. The use of cash is been minimized after the introduction of this system. The electronic cards, also known as E-wallets, have made online transactions simple and less complicated. With the optimal use of advanced technology, companies are achieving success by solving consumer’s basic problem of carrying cash; hence it is a great move.

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