{"id":30177,"date":"2020-04-01T20:15:14","date_gmt":"2020-04-01T14:45:14","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=30177"},"modified":"2022-02-25T16:29:12","modified_gmt":"2022-02-25T10:59:12","slug":"prepaid-payment-instruments-say-goodbye-to-your-cards","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/prepaid-payment-instruments-say-goodbye-to-your-cards\/","title":{"rendered":"Prepaid Payment Instruments\u2013 Say goodbye to your cards"},"content":{"rendered":"<p class=\"has-drop-cap\">If an individual is planning to start a Prepaid Payment Instrument (PPI), obtaining <a href=\"https:\/\/enterslice.com\/prepaid-wallet-license\">Prepaid Wallet License<\/a> is an absolute necessity. Prepaid Payment Instruments are methods that facilitate transactions of goods that are purchased and services availed by the consumer. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Who can issue Prepaid Payment Instrument (PPI)<\/h2>\n\n\n\n<p>RBI has\nspecified some requirement which is required to be fulfilled before issuing\nprepaid payment instrument, those requirements are:<\/p>\n\n\n\n<ul><li>Banks\nand Non-Banking Financial Companies which have complied with the capital\nadequacy requirement of the RBI.<\/li><li>In\ncase of all other entities having minimum net owned funds of Rs10 Lakhs.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Defining Mobile Wallets<\/h2>\n\n\n\n<p>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&rsquo;s account who will accept it.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Services offered by Mobile Wallets<\/h2>\n\n\n\n<ul><li>BALANCE\nEnquiry<\/li><li>Passbook\/Transaction\nHistory<\/li><li>Accept\nMoney<\/li><li>Pay\nMoney<\/li><li>Manage\nProfile<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Types of Mobile Wallet Accounts<\/h2>\n\n\n\n<p><strong>Basic Mobile Wallet Account: <\/strong>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 <strong><em>Rs 20,000 per month<\/em><\/strong>.<\/p>\n\n\n\n<p><strong>The full KYC Account:<\/strong> This account is an upgraded version of the basic account this can be operated only after completing the <strong><a href=\"https:\/\/en.wikipedia.org\/wiki\/Know_your_customer\">KYC Details<\/a><\/strong> and submitting the required documents.<\/p>\n\n\n\n<p>The upgraded\nversion provides the following facility:<\/p>\n\n\n\n<ul><li><strong>Without ATM withdrawal facility:<\/strong> Instant limit of Rs1, 00,000 and Spend Limit of Rs5, 00,000.<\/li><li><strong>With ATM withdrawal facility:<\/strong> Instant limit of Rs50,000 and a monthly spend limit of Rs3,\n00,000.<\/li><\/ul>\n\n\n\n<div class=\"read\"><p><b>Also, Read:<\/b> <mark><a href=\"https:\/\/enterslice.com\/learning\/prepaid-payment-instruments\/\" target=\"_blank\" rel=\"noopener noreferrer\">Prepaid Payment Instruments and Risks and Regulations There under: Check Now<\/a><\/mark>.<\/p><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">What are the three\ncategories of Prepaid Payment Instruments (PPI)?<\/h2>\n\n\n\n<ul><li>Closed Prepaid Payment Instruments<\/li><li>Semi-Closed Prepaid Payment Instruments<\/li><li>Open Prepaid Payment Instruments<\/li><li>Semi-open system payment instrument<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Closed Prepaid Payment Instruments or\nClosed wallets<\/strong><\/h3>\n\n\n\n<p>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.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Semi-closed Prepaid Payment\nInstruments or Semi-closed wallets<\/strong><\/h3>\n\n\n\n<p>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 <a href=\"https:\/\/enterslice.com\/learning\/all-you-must-know-about-semi-closed-wallet\/\">Semi-closed wallets<\/a>, 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.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Open wallets<\/strong><\/h3>\n\n\n\n<p>This is a type of wallet which can be used to purchase goods and services and also allow cash withdrawal at ATM&rsquo;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.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Minimum Capital Requirements for Prepaid Payment Instruments (PPI)<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>From the Banks<\/strong><\/h3>\n\n\n\n<p>There is no separate capital requirement prescribed for\nLicensed\/Scheduled Banks or NBFCs registered with Reserve Bank of India (RBI).\nThey must be authorized to issue the PPI after obtaining approval from RBI.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>For other entities<\/strong><\/h3>\n\n\n\n<p>A minimum net-worth of 25 crores is required as per the last\naudited Balance Sheet which shall be maintained by all entities.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Conditions for the issuance\nof PPI<\/strong><\/h2>\n\n\n\n<ul><li>The\nvalidity of the instruments must be a minimum of 3 years.<\/li><li>Instruments\ncannot be reloaded.<\/li><li>Full\nKYC of the purchases of the instruments will be maintained<\/li><li>The\nmaximum value of such instruments should not exceed Rs. 50000<\/li><li>The\nissuer must maintain the details of the persons to whom the instruments are\nissued.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Prepaid Wallet license\neligibility requirements<\/strong><\/h2>\n\n\n\n<p>The\nissuance of the prepaid wallet license in India\ndepends on the type of entity.<\/p>\n\n\n\n<ul><li><strong>Licensed \/ Scheduled Banks and Registered Non-Banking Financial Companies (NBFCs)<\/strong> must obtain authorization from the Reserve<strong> Bank of India(RBI<\/strong>)<\/li><li><strong>Newly incorporated entities are<\/strong> required to submit a certificate<strong> from their chartered Accountants<\/strong>mentioning the current net<strong> worth along<\/strong> with the balance<strong> sheet.<\/strong><\/li><li><strong>Applicant companies<\/strong> having FDI\/FII are required to apply for the license as per the minimum capital mentioned in the Consolidated FDI policy guidelines.<\/li><\/ul>\n\n\n\n<ul><li><strong>STEP 1 <\/strong><\/li><\/ul>\n\n\n\n<p>The first step is setting up the company as per the Companies Act, 2013 by filing an application through the Registrar of Company.<\/p>\n\n\n\n<ul><li><strong>STEP 2<\/strong><\/li><\/ul>\n\n\n\n<p>Application\nfiling for the approval in Form A as mentioned in Regulation 3(2) of the\nPayment and Settlement System Regulations, 2008. Fees is to be paid to the\nReserve Bank of India for the grant of License. Documents are to be submitted\nat this step.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Documents required for acquiring Prepaid wallet license<\/h2>\n\n\n\n<ul><li>Name and other important details of the applicant<\/li><li>Constitution of applicant<\/li><li>Address proof of the registered office<\/li><li>Certificate of Incorporation<\/li><li>Primary business activity of the company<\/li><li>Information about the management of the company<\/li><li>Statutory auditor of Company<\/li><li>Audited balance sheet<\/li><li>Name and addresses of bankers of the company<\/li><li>Other necessary documents as required<\/li><\/ul>\n\n\n\n<ul><li><strong>STEP 3<\/strong><\/li><\/ul>\n\n\n\n<p>The\nscreening process is conducted by RBI to ensure that the applicants are\nfulfilling all the criteria and are eligible.<\/p>\n\n\n\n<ul><li><strong>STEP 4<\/strong><\/li><\/ul>\n\n\n\n<p>The next\nstep is to meet the eligibility criteria for which Reserve Bank of India(RBI)\nissues an &lsquo;in-principle&rsquo; approval. The validity of in-principle approval issued\nby RBI will be six months from the date of granting the in-principle approval.<\/p>\n\n\n\n<ul><li><strong>STEP 5<\/strong><\/li><\/ul>\n\n\n\n<p>The company\nis required to submit a System Audit Report to RBI within six months. If the\ncompany fails to submit the report, the in-principle approval will lapse\nautomatically. The entity can take a one-time extension of six months by making\nan appeal in writing in advance with valid reasons.<\/p>\n\n\n\n<ul><li><strong>STEP 6<\/strong><\/li><\/ul>\n\n\n\n<p>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.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Conclusion<\/h3>\n\n\n\n<p>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&rsquo;s basic problem of carrying cash; hence it is a great move.<\/p>\n\n\n\n<div class=\"read\"><p><b>Read More:<\/b> <mark><a href=\"https:\/\/enterslice.com\/learning\/new-type-of-prepaid-payment-instruments-ppis-launched-by-rbi\/\" target=\"_blank\" rel=\"noopener noreferrer\">RBI Unveils New type of Semi-Closed Prepaid Payment Instruments<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>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 [&hellip;]<\/p>\n","protected":false},"author":36,"featured_media":30202,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1329,1332],"tags":[2018],"acf":{"service_id":"72"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Prepaid Payment Instruments \u2013 Say Goodbye to Your Cards<\/title>\n<meta name=\"description\" content=\"Prepaid payment instruments are methods that facilitate transactions of goods that are purchased and services availed by the consumer.\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterslice.com\/learning\/prepaid-payment-instruments-say-goodbye-to-your-cards\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Prepaid Payment Instruments \u2013 Say Goodbye to Your Cards\" \/>\n<meta property=\"og:description\" content=\"Prepaid payment instruments are methods that facilitate transactions of goods that are purchased and services availed by the consumer.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterslice.com\/learning\/prepaid-payment-instruments-say-goodbye-to-your-cards\/\" \/>\n<meta property=\"og:site_name\" content=\"Enterslice\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/enterslice\" \/>\n<meta property=\"article:published_time\" content=\"2020-04-01T14:45:14+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-02-25T10:59:12+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/04\/Prepaid-Payment-Instruments\u2013-Say-goodbye-to-your-cards.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"670\" \/>\n\t<meta property=\"og:image:height\" content=\"352\" \/>\n<meta name=\"twitter:card\" content=\"summary\" \/>\n<meta name=\"twitter:creator\" content=\"@enterslice\" \/>\n<meta name=\"twitter:site\" content=\"@enterslice\" \/>\n<!-- \/ Yoast SEO plugin. -->","authorName":"Mahiya Ahmad","authorImageUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/03\/picture.jpg","authorDescription":"Mahiya Ahmad is a BBA Graduate from IMT, Dubai and gained a good amount of work experience in Dubai, She has a flair of writing and has a blog of her own too. 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