Prepaid Payment Instruments

News: Recently, Reserve Bank of India (RBI) has permitted the Prepaid Payment Instrument holders to make and receive UPI payments through the third-party mobile application. 

About Prepaid Payment Instruments (PPIs) 

• They are financial tools that help facilitate the purchase of goods and services, including financial services, remittances and fund transfer, among others, against the value stored in them. 
• Examples: Mobile Wallets (semi-closed system PPIs), Gift Cards (closed system PPIs), Debit or Credit Cards (open system PPIs). 
• Issuance: They can be issued as cards or wallets by banks and non-banks after obtaining necessary approvals from the RBI. 
• Types: They are of two types– Small PPIs and Full KYC (Know Your Customer) PPIs. 
  • Small PPIs: They are issued by the banks and non-banks after obtaining minimum details of the PPI holder. They can be used for purchase of goods and services from certain merchant locations, but fund transfer or cash withdrawal is not permitted. 
    • Small PPIs are divided into two categories: PPIs up to Rs 10,000 (with cash loading facility) and PPIs up to Rs 10,000 (without cash loading facility).  
  • Full-KYC PPIs: They are issued by the banks and non-banks after completing the KYC of PPI holder. They can be used for purchase of goods and services, funds transfer or cash withdrawal.