Prepaid Instruments

Recently, the RBI has made it mandatory to offer interoperability between Prepaid instruments (PPIs) by the end of March 31, 2022.

Understanding Prepaid Instrument

Payment instruments that facilitate purchase of goods and services, including funds transfer, against the value stored on such instruments. Example: Smart cards, internet wallets, mobile wallets, paper vouchers and any such instrument which can be used to access the pre-paid amount.

Closed System Payment Instruments: Issued by an entity for facilitating the purchase of goods and services from that entity only and do not permit cash withdrawal.
Semi-closed System PPIs: Issued by banks (approved by RBI) and non-banks (authorised by RBI) for purchase of goods and services, including financial services, remittance facilities, etc., for use at a group of clearly identified merchant locations / establishments which have a specific contract with the issuer to accept the PPIs as payment instruments.
Open System PPIs: PPIs issued by banks for use at any ATMs, PoS terminals etc. Can be used for cash withdrawal, money transfer etc. Example: Debit Cards and Credit Cards; ICICI Travel Card, SBI Foreign Travel Card, State Bank Achiever Card etc.

Regardless of who issues the PPI card or e-wallet, customers should be able to use their PPI card or e-wallet at any payment’s acceptance point. For example, you would be able to transfer money between two different wallets (say between Paytm and Amazon Pay) and between wallets and Bank accounts.

Maximum amount in KYC PPIs: Presently, the maximum amount that can be loaded in fully compliant KYC enabled PPI is Rs 1 lakhs. The RBI has decided to enhance this limit to Rs 2 lakhs.
Cash Withdrawal from Full-KYC PPIs issued by Non-banks: Presently, cash withdrawal is allowed only for full-KYC PPIs issued by banks. However, this facility is not available to the PPIs issued by non-banks. Now, the RBI has permitted cash withdrawal from Full-KYC PPIs issued by non-banks.