Coming soon: New Pre-Paid Payment Instruments (PPI)

RBI as per the guidelines provided under the Payment and Settlement Act, 2005 defined Prepaid Payment Instruments (PPIs) as instruments of payment that facilitate buying of goods and services, including the transfer of funds, financial service and remittances, against the value stored within or on the instrument. Reserve Bank of India in its Statement on Developmental and Regulatory Policies published on Thursday (05-12-2019) sets out various developmental and regulatory policy measures for strengthening regulation and supervision; broadening and deepening of financial markets; and improving payment and settlement systems.

Prepaid Payment Instruments (PPIs) have been playing an important role in promoting digital payments.  Currently there are are already three types of PPIs viz. closed system, Semi closed system, and open system issued by the banks and non-bank entities against the value paid in advance by the cardholder. These virtual cards come with security features such as the Web and card PIN. The maximum value that can be loaded by any prepaid card at any point of time is now increased to Rs.2 lakh from earlier limit of Rs One lakh). RBI also said that Interoperability is mandatory for full KYC PPI.

To further facilitate prepaid instrument usage, the Central Bank proposes to introduce a new type of PPI that can be used only for purchase of goods and services up to a limit of ₹10,000. The loading/reloading of such PPI will be only from a bank account and used for making only digital payments such as bill payments, merchant payments, etc. Such PPIs can be issued on the basis of essential minimum details sourced from the customer. RBI communiqué said that instructions in this regard will be issued by December 31, 2019.