Prepaid Wallet License

The Reserve Bank of India (RBI) has found numerous ways to advance quick track money transfer. Payment Wallet License is otherwise called Prepaid Wallet License. Payment Wallet License allows its client to buy things or to make exchanges in a simple manner utilizing digital stage. There are five distinct sorts of Prepaid wallet License, they are:

• Mobile Prepaid Instruments
• Semi-Open system payment instruments
• Open system payment instruments.
• Semi-Closed system payment instruments
• Closed system payment instruments

Prior to putting Prepaid Wallet Instruments to utilize, it is fundamental to acquire License for it. The Reserve Bank of India (RBI) now and again gives traces, rules and regulations connected with Prepaid Wallet License. Any non-Bank entity that tries to get prepaid license should cling to the given rules prior to applying for prepaid wallet license.

Understand Payment/Prepaid Wallet Instruments

Prepaid Payment Instruments are payment instruments that work with the acquisition of labour and products against the stored worth on such instruments. The worth fixed on such instruments addresses the worth paid by the holder via cash, by credit card or debit to bank account.

The prepaid instruments can be given as:

Magnetic Stripe cards, smart cards, Internet Accounts, versatile wallets, paper vouchers, mobile accounts, and any such instruments that can help in utilizing prepaid sum or payment sum.

Kinds of Prepaid Payment Instruments for Obtaining Payment Wallet License

Prior to acquiring Prepaid Wallet License, an individual or entity should know the kinds of Prepaid Payment Instruments that is accessible:

• Close System Payment Instruments– This kind of payment instrument is by and large given by the business establishment to utilize it at their separate establishment as it were. Money withdrawal or reclamation isn’t allowed in this instrument.
• Semi-Closed Payment Instruments– This payment instrument is redeemable at a gathering of obviously distinguished merchant areas or establishments. Here the agreement is explicitly made with the issuer to acknowledge the payment instrument. The holder here isn’t allowed money withdrawal or recovery.
• Open System Payment Instruments– These payment instruments can be utilized for both the acquisition of labour and products just as cash withdrawal at ATMs.
• Semi-Open System Payment Instruments– This kind of payment instruments can be utilized for acquisition of labour and products at any card accepting dealer areas. The holder here isn’t allowed to withdraw cash here.

Qualification for Obtaining Prepaid Wallet License

These are the accompanying entities which are qualified to acquire prepaid wallet License. They should meet the accompanying necessity as indicated for them:

• Non-banking Financial Institutions (NBFCs) and Scheduled banks: These establishments need to get earlier approval from Reserve Bank of India (RBI) for motivation behind acquiring the Payment Wallet License.
• New Incorporations: The recently consolidated organizations that don’t have a reviewed financial statement should get a properly confirmed approval from a Chartered Accountant (CA).They should pronounce the current total assets and furthermore set up a temporary balance sheet.
• Company having Foreign Direct Investment or Foreign Institutional Investment: These organizations should have a base capital according to the rules of the FDI strategy.
• Any remaining entities: All different entities need to have a base net worth of INR 25 Crore according to their most recent examined balance sheet.
• The company commenced under Companies Act: A private or public organization consolidated according to the Companies Act 2013 can do this business of issue of prepaid wallet provided that it is approved by its article condition in Memorandum of Association.

Minimum Capital Requirements to acquire Prepaid Wallet License

The Minimum capital prerequisites to get a Prepaid Wallet License or Payment Wallet License for various entities are recorded beneath:

1.NBFCS or Scheduled Banks: There is no predefined least capital necessity endorsed for NBFCs or Scheduled Banks to get a Prepaid Wallet License/Payment Wallet License. In any case, they need to get approval from RBI and should have an approval to give prepaid instruments.

• All non-bank entities looking for authorisation from RBI under the PSS Act will have a base positive net worth of INR 5 crore.
• From that point, before the finish of the third financial year from the date of getting last authorisation, the entity will accomplish a base positive net worth of INR15 crore which will be kept up with consistently.

1.FEMA Authorized Entities: The entities that are approved under the Foreign Exchange Management Act for the reason of issuing foreign trade prepaid wallets are excluded from the rules. Those payment instruments should be utilized for limited permitted current account.

Requirements for acquiring Prepaid Wallet License

The accompanying recorded are the necessities for acquiring Prepaid Wallet License/Payment Wallet License:

 

• The Net worth will comprise of the accompanying things:

1.Paid-up Equity capital;

2.Preference shares;

3.Free Reserves;

4.Share premium record; and

5.Capital reserves addressing surplus.

• The Banks and RBIs need to get approval from the administrative Department of RBI and NBFCs.
• Any current entity who has the authorization to give prepaid instrument and furthermore has gotten a license from RBI as per the previous capital prerequisite requirements to expand their net worth according to the rules before September 30, 2020
• Organizations getting registered according to the Companies Act, 2013 need to get a license from the RBI.
• The article provision of the Memorandum of Association will license the organization to attempt the exercises of the payment instruments’ issuer.

Procedure to Obtain a Prepaid Wallet License

Coming up next are the methods to get the approval for getting a Prepaid Wallet License/Payment Wallet License:

• Step-1: Making an Application in Form A for approval according to Regulation 3(2) of the Payment and Settlement System Regulations, 2008, with the recommended government charge and submitting each of the documents and details to the Reserve Bank of India to acquire the PPI License.
• Step-2: The RBI will start the Screening system to ensure qualification of the candidates.
• Step-3: RBI will likewise apply checks, between alia, on specific fundamental perspectives like client assistance and proficiency, specialized and other related prerequisites, wellbeing, and security viewpoints.
• Step-4: After the RBI is contended in regards to the Applicant’s qualification measures in the wake of actually taking a look at its fit and legitimate status, it gives an in-principle approval. The validity of the in-principle approval will be a half year from the date of giving such approval.
• Step-5: The Company needs to present an acceptable Audit Report to RBI, within a half year. The organization needs to present the System Audit Report (SAR), any other way, the in-principle approval will slip by naturally. The Company can get a one-time expansion of a half year by making an appeal recorded as a hard copy in advance mentioning each of the legitimate reasons.
• Step-6: After considering each of the specifics outfitted by entities, the Company will be granted approval. The organization needs to initiate business within a half year from the grant of Authorization Certificate.

Documents Required for Obtaining Prepaid Wallet License

The accompanying reports are needed for getting a prepaid wallet license/Payment Bank License:

• Name of the Applicant
• Address Proof of Registered Office
• Declaration of Incorporation
• A Complete Report of the chief business of the entity
• Administrative Details
• Legal Auditor of the Company
• The reviewed Balance sheet of the financial year
• Name and Address of Bankers of the Company
• Anticipated benefits to Indian Financial System
• Proposed Capital Amount
• Wellsprings of Funds
• Some other Information needed by RBI

Benefits of Having a Prepaid Wallet License

The upsides of keeping prepaid wallet License or prepaid wallets are as per the following:

• Prepaid Wallets can never be taken or lost as they are protected inside the versatile, as actual wallet can at times be lost or taken.
• The issue of progress money commonly confronted is taken out if there should be an occurrence of payments made through web-based prepaid wallets.
• Indeed, even the web-based payments, for example, the web banking need many details and in certain banks, the sum can be transferred solely after 24 hours or 12 hours of adding the recipient. There is no such issue in these wallets as money can be transferred in a flash.
• There is no or negligible additional expense for running these wallets. One doesn’t have to pay initiation expense, month to month charges or yearly charges as on account of IMPS in web banking or the yearly charge of check cards.
• These wallets likewise give motivators and prizes for alluding to somebody.
• Stacking money in these wallets isn’t a troublesome assignment. Money can be added to these wallets through net banking, debit cards within a small duration of time.
• Auto compensation facility of these wallets fills in as a rescuer for working people who as a rule fail to remember their due payment dates.

For what period is Prepaid Wallet License being valid?

• All PPIs issued in the nation will have a base validity time of 1 year from the date of last stacking/reloading in the PPI. PPI guarantors are allowed to give PPIs with a more drawn-out validity.
• Certificate of RBI Authorisation will be valid for quite a long time, except if in any case determined. Any way it will be open to review including the dropping of Certificate of Authorisation by RBI.
• On the off chance that, the PPI is given as card (with legitimacy period referenced on the card), then, at that point, the client will have the choice to look for substitution of the card.
• The extraordinary equilibriums in any payment instrument will not be ended quickly at the termination, of the instrument. The worth might be exhausted at the pace of 10% of the extraordinary worth each month. The holders may likewise be enough forewarned ahead of time as respects the expiry of the validity of the payment instrument

How to contact Estabizz?

• Fill the form.
• Get a call back.
• Submit the required documents.
• Track the progress of your application.
• Get the expected results.

Frequently Asked Questions (FAQs) about Prepaid Payment Instruments (PPIs)

1. On what authority has the Reserve Bank of India (RBI) issued the Master Directions (MD) on Prepaid Payment Instruments (PPIs) as of August 27, 2021 (MD-PPIs)?

The RBI launched the Master Directions on the strength of Section 18 along with Section 10(2) of the Payment and Settlement Systems Act, 2007 (PSS Act).

2. What is the definition of PPIs?

PPIs are tools that ease the purchase of goods and services, assist in conducting financial services, and facilitate remittance services, all against their inbuilt value.

3. Who can issue PPIs?

Both banks and non-banking companies can issue PPIs. Banks do so after receiving RBI approval. Non-banking PPI issuers are companies registered under the Companies Act, 1956 / 2013 and established in India. They can distribute PPIs to individuals or companies once they’ve gone through the authorization process with the RBI.

4. Who are the holders of a PPI?

A PPI holder is the individual purchasing the PPI directly from the issuer. In instances involving gift PPIs, the intended beneficiary, even if not the purchaser, can also hold PPIs.

5. What purposes do the PPI issuer companies find for the funds accumulated from PPI holders?

PPI issuers use the accumulated monies to make payments to merchants involved in the acceptance arrangement. They also use the funds to aid fund transfer and remittance services on behalf of PPI holders.

6. What’s the count on PPI issuers approved by the RBI? Where can I get lists of licensed bank and non-bank PPI issuers?

The list of authorised bank and non-bank PPI issuers can be found on the RBI’s official website.

7. Describe Closed System PPIs?

Closed System PPIs are tools issued by an entity exclusively for purchasing goods and services from the same. These PPIs do not allow cash withdrawal and can’t make payments or settlements for third-party services. Their issue or operation is not identified as a payment system by RBI, and hence, they do not regulate or supervise it.

8. What are the different types of PPIs?

PPIs needing RBI approval before issuing belong to two categories:

- Small PPIs: issued by banks or non-banking entities after acquiring minimal details of the PPI holder. These PPIs allow purchase of goods and services from entities having a specific contract with the issuer. Fund transfers or cash withdrawals are not permitted with these PPIs.- Full-KYC PPIs: These PPIs are rolled out by banks or non-banks on completion of the PPI holder's Know Your Customer (KYC) process. They can be used to purchase, transfer funds, or withdraw cash.

9. Describe the types of Small PPIs.

Small PPIs come in two types:

- PPIs up to ₹10,000 with the ability to load cash. After two years, these PPIs should convert into full-KYC PPIs.- PPIs up to ₹10,000 that don't provide the cash loading option.

10. In what ways can PPIs be loaded with funds?

You can load funds into PPIs through cash (not available in one type of Small PPI), debit to bank accounts, credit/ debit cards, PPIs (as allowed intermittently), and other payment tools issued by regulated entities in India. These transactions occur only in Indian Rupees (INR).

11.What are Prepaid Payment Instruments (PPIs)?

PPIs are authorized financial instruments that allow you to purchase goods and services, perform financial services, and facilitate remittance transactions using the value stored within them. They come in various forms such as wallets, cards, and vouchers.

12.Who is authorized to issue PPIs?

Both banks and non-banking financial companies (NBFCs) that comply with the Reserve Bank of India’s (RBI) guidelines can issue PPIs.

13.What can PPI funds be used for?

Funds stored in PPIs are mainly used to pay merchants in exchange for goods and services and to facilitate fund transfers or remittances by the holder.

14.Are there different types of PPIs?

Yes, there are three primary types:

• Closed System PPIs: Issued by a specific entity for transactions only within the issuer’s network. These are not RBI-regulated.
• Open System PPIs: Regulated by RBI and available in two forms, Small PPIs and Full-KYC PPIs, depending on the identity verification level of the holder.

15.What is the difference between Small PPIs and Full-KYC PPIs?

Small PPIs are reloadable with a monthly load limit of ₹10,000 and an annual limit of ₹1,20,000. They do not allow cash withdrawals or fund transfers and must be upgraded to a Full-KYC PPI within 24 months. Full-KYC PPIs, however, permit a higher balance of up to ₹2,00,000, have no monthly transaction limit, and enable cash withdrawals and fund transfers.

16.What is the monthly cash loading limit for PPIs?

The cash loading limit is capped at ₹50,000 per month, within the total limit of the PPI. Electronic or online loading follows the maximum limit of the PPI.

17.What happens if a Small PPI is not converted into a Full-KYC PPI within 24 months?

If not converted, no further credits will be permitted in the PPI, although the existing balance can still be utilized until expiry.

18.Can a closed Small PPI be reopened using the same mobile number and details after 24 months?

No, reopening a closed Small PPI using the same mobile number and verification details is not permitted.

19.How can the balance of a PPI be refunded or transferred upon closure?

The holder has the option to either transfer the unused balance back to the source of payment at the time of PPI loading or to a bank account, after fulfilling the necessary KYC requirements.

20.Are funds transfers allowed from a Full-KYC PPI?

Yes, funds transfers from a Full-KYC PPI are allowed up to a limit of ₹10,000 per month per holder. This can be increased to ₹2,00,000 per month for a pre-registered beneficiary, depending on the risk profile and operational risks as assessed by the PPI issuer.

21. Can I close my ‘Full-KYC’ PPI? What happens to the remaining balance?

Yes, you have the option to close your ‘Full-KYC’ PPI at any time. Upon closure, the issuer allows the remaining balance to be transferred to a bank account or another PPI within the guidelines set for this type of PPI. During PPI issuance, issuers provide an option to pre-designate a bank account or PPI for balance transfers during closure or expiry. However, you can choose a different bank account at closure time.

22. What is the cash withdrawal limit for bank-issued PPIs?

For PPIs issued by banks, you can withdraw cash at ATMs, PoS terminals, or from banking correspondents. The limit for cash withdrawal at PoS devices is ₹2,000 per transaction with a monthly limit of ₹10,000, applicable across all locations from Tier 1 to 6 centers.

23. What about cash withdrawal limits for PPIs issued by non-banks?

For PPIs issued by non-banks, the cash withdrawal limit is also set at ₹2,000 per transaction. However, the total monthly limit, including various channels such as agents, ATMs and PoS devices, is ₹10,000 per PPI.

24. Are there other categories of PPIs besides Small PPIs and Full-KYC PPIs?

Yes, other categories of PPIs include Gift PPIs and PPIs for Mass Transit Systems (PPI-MTS).

25. What features do Gift PPIs offer?

Gift PPIs come with specific features:

• The maximum value of each Gift PPI must not exceed ₹10,000.
• These PPIs are not reloadable.
• Cash-out or fund transfers are not permitted, although funds may be transferred back to the source account after the PPI holder’s consent.
• Upon request, they can be revalidated (including through the issuance of a new instrument).
• The requirement for Additional Factor Authentication (AFA) or Two Factor Authentication (2FA) for Gift PPI transactions is not mandatory.

26. What are the unique features of PPI-MTS?

PPI-MTS have the following key features:

• They are issued by MTS operators.
• They can be used within the transit system premises and at related merchant locations.
• They are reloadable, with a maximum balance limit of ₹3,000.
• Cash-outs and fund transfers are not permitted.
• Upon request, they can be revalidated.
• The AFA/2FA requirement is not mandatory for transactions undertaken with PPI-MTS.

27. What does KYC mean as used in the MD-PPIs?

KYC, as stated in the MD-PPIs (Master Direction-PPIs), refers to the guidelines set forth in the “Master Direction – Know Your Customer Direction, 2016”. These processes include KYC / Anti-Money Laundering (AML) / Combating Financing of Terrorism (CFT) and apply to all PPI issuing entities.

28. Does a PPI holder earn interest on the PPI balance?

No, PPI issuers do not offer interest on the balance held in the PPI.

29. What forms can a PPI take?

PPIs can be issued as cards, wallets, or other instruments that enable access to the PPI and use of the balance. However, paper voucher PPIs are not permitted.

30. What should a PPI issuer disclose at the time of issuance?

Throughout the issuance of a PPI, issuers are required to convey in clear, simple language all essential terms and conditions for using the instrument. This includes information about all associated fees and charges and the expiry period and conditions related to the PPI’s expiration.

31. Can new PPIs be created for each cash remittance?
No, for cash-based remittances, it’s not allowed to create new PPIs each time. Use the previously created PPI for the same person.

32. Is it possible to issue co-branded PPIs?
Yes, PPIs can either be issued alone or together with another company.

33. Who can partner with PPI issuers for co-branding?
Partners must be companies registered in India or government departments. If a bank is involved, it must be RBI-licensed. For two non-banks, one must be assigned as the issuer ahead of time.

34. Who handles customer service for a co-branded card?
The designated PPI issuer among the partners will take care of all customer service matters.

35. Can PPIs be used for buying goods abroad?
Yes, but only PPIs from authorized banks, and only with the PPI holder’s request. Each transaction can’t exceed ₹10,000, with a monthly limit of ₹50,000.

36. Are PPIs allowed for receiving money from abroad?
Yes, for amounts up to ₹50,000 per transaction. Amounts more than ₹50,000 must go directly to a bank account.

37. For a ₹75,000 remittance, can some go to a PPI and the rest to a bank?
No, if a remittance exceeds ₹50,000, the entire amount must be banked.

38. Is Two-Factor Authentication (2FA) needed for using PPIs?
Yes, for all debit transactions from the wallet. PPI cards follow the same rules as debit cards, except for gift PPIs and PPI-MTS.

39. What is the minimum valid period for a PPI?
PPIs must be valid for at least one year after the last reload, but issuers can extend this.

40. What happens to inactive PPIs?
If not used for a year, a PPI will become inactive but can be reactivated after due checks.

41. What about the money in a discontinued PPI?
Users can redeem any remaining balance if the PPI scheme is closed or discontinued by RBI.

42. How are refunds from failed transactions handled?
They should be credited back to the PPI immediately, even if it exceeds the PPI’s limit.

43. Can refunds from other payment methods be credited to a PPI?
No, they shouldn’t.

44. What is the process for handling customer complaints for PPI?
Issuers must have a clear, public complaints policy, including a nodal officer and a complaint tracking system. Issues should be resolved within 30 days.

45. Will PPI issuers provide transaction statements?
Yes, statements for the last six months and details of the last ten transactions must be accessible to PPI holders.

46. Does the RBI Ombudsman Scheme cover PPI issues?
Yes, it’s available for complaints regarding PPIs.

47. Can multiple PPIs be issued to one customer?
A customer can have one of three types of PPIs but not multiple of the same type with the same mobile number.

48. How are the limits managed for customers with multiple PPIs?
Limits are tracked across all PPIs issued to a customer by centralised systems. The combined value in all PPIs should not exceed the set limits.

49. What is interoperability?
It allows PPIs to work with other payment systems, making transactions more convenient.

50. Who can offer PPI interoperability?
Any authorized bank or non-bank that issues PPIs.

 

51. Must PPI issuers offer interoperability?

Yes, PPI issuers must allow interoperability. PPI issuers are required to enable interoperability through authorised card networks and UPI for full-KYC PPI holders. All acceptance modes, including QR codes, must be interoperable before March 31, 2022.

52. I have a small PPI, yet my issuer won’t allow interoperability. Why?

Interoperability is only possible for full-KYC PPIs. So, if your PPI has not completed full KYC, the issuer may not allow interoperability.

53. Which methods provide interoperability?

Interoperability can happen through UPI for wallet-based PPIs and via authorised card networks for card-based PPIs.

54. How are unauthorised transactions involving bank-issued PPIs safeguarded?

Bank PPI issuers follow RBI circulars to protect customers from unauthorized electronic banking transactions.

55. What protection is there for unauthorized transactions involving non-bank issued PPIs?

The framework set out in paragraph 17 of the MD-PPIs limits customers’ liability for unauthorized transactions involving non-bank PPIs. This framework has been in effect since March 1, 2019.

56. Does this framework cover all PPI types in the MD-PPIs?

The framework is applicable to all PPI types issued by authorized non-bank PPI issuers, except for PPIs issued under the PPI-MTS as per paragraph 10.2 of MD-PPIs. However, PPI-MTS still covers cases of issuer fraud, negligence, or deficiency.

57. What constitutes electronic payment transactions in this context?

Electronic payment transactions can be either remote (online) or face-to-face. Remote transactions don’t require physical PPIs at transaction points, like wallets or card-not-present transactions. On the other hand, face-to-face transactions require physical PPIs at the point of transaction, such as transactions at ATMs or PoS devices.

58. Must PPI holders register for SMS alerts?

Yes, PPI holders need to register for SMS alerts for protection under this framework.

59. Should a customer receive an alert for each transaction on their PPI account?

Yes, non-bank PPI issuers must send an SMS alert, and optionally an email alert, to the customer for every payment transaction. Transaction alerts should include contact details for reporting unauthorized transactions.

60. Where can a customer report an unauthorized transaction on their PPI account?

Issuers must provide 24×7 access for customers to report unauthorized transactions via website, SMS, email, or a dedicated toll-free helpline. In addition, a direct link for users to lodge complaints and report unauthorized electronic payment transactions will be provided on issuers’ mobile apps or websites.

61. What happens when a customer reports an unauthorized transaction?

Once a customer reports unauthorized activity or loss of an instrument, the non-bank PPI issuer must quickly block further unauthorized transactions. Any new unauthorized transactions are the issuer’s responsibility.

62. Are customers liable for fraud from the issuer’s side?

Customers hold zero liability in cases of fraud, negligence, or deficiency by the non-bank PPI issuer. This also includes PPI-MTS issuers.

63. Should customers report issuer-related fraud?

While reporting issuer-related fraud is always wise, it’s not mandatory. Non-bank PPI issuers can’t deny compensation for their own fraud or negligence, even if the customer hasn’t reported an unauthorized transaction.

64. How is customer liability determined in system breaches unrelated to the customer or PPI issuer?

If customers report unauthorized transactions within three days of notification, they hold no liability. Between four and seven days, their liability caps at ₹10,000. Beyond seven days, the PPI issuer’s policy applies.

65. When does the countdown for reporting unauthorized transactions start?

The countdown starts the day after the customer receives the transaction notification from the non-bank PPI issuer.

66. Who’s liable for losses from customer negligence?

If customers share their payment credentials, they’re responsible for all losses until they report the unauthorized transaction to the issuer.

67. Who covers losses after a customer reports unauthorized transactions?

The non-bank PPI issuer is responsible for any loss after the customer reports an unauthorized transaction.

68. When will the reversal amount be credited in the case of unauthorized transactions?

The non-bank PPI issuer must reverse the amount of any unauthorized transaction within 10 days of the customer’s report, even if it exceeds the PPI’s limit. The reversal date will match the date of the unauthorized transaction.

69. When can customers use the credited reversal amount?

Customers can use the credited reversal amount once the non-bank PPI issuer resolves the complaint and decides on the customer’s liability, which must happen within 90 days of the complaint.

70. Who has to prove an unauthorized transaction occurred?

It’s up to the non-bank PPI issuer to prove that a transaction was authorized when a customer claims it was not.

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