Overview of Prepaid Wallet License
The PPI License Payment and Settlement System Act, 2007, is given below with the assistance of the RBI. PPI is a device that facilitates the purchase of goods and services against the amount or value stored on it, along with financial services, remittances, and fund transfers.
Not unusual examples encompass e-wallets, pay-as-you-go playing cards, and cell wallets, along with Paytm and PhonePe. Therefore, any entrepreneur who aims to run a business of prepaid payment instruments (PPI) will have to obtain a PPI license from the concerned authority to ensure compliance with financial laws and rules, protect customers' funds, and work safely within the financial ecosystem.
Seek professional guidance from our prepaid wallet license consultants to acquire a prepaid payment wallet license in India.
What are Payment Wallet/Prepaid Payment Instruments?
Payment wallets (also classified as prepaid payment instruments (PPIs)) in the industry are digital or physical instruments to store funds and conduct transactions with no direct connection to a bank account. As an analogy, they are essentially electronic purses that allow users a means to make payments for goods and services, transfer funds, and facilitate other financial transactions with money stored in the form of preloaded funds.
Here is a more detailed explanation:
What they are:
Pre-loaded Funds:
PPIs are designed to hold a pre-determined amount of funds for users to deposit or load into that instrument.
Digital or Physical:
There may be many forms of PPIs, including basic mobile wallets, prepaid cards, or even paper vouchers.
No Direct Banks:
They don’t, unlike debit cards, require a real-time link to a bank for each transaction.
Variety of uses:
PPIs allow users to purchase online and individually, transfer money and reach limited financial services.
Different Types of Preloaded Payment Instruments:
Cellular Wallets: Apps like Paytm, PhonePe, and MobiKwik are widely used for bills.
Prepaid Cards: A physical card that can be loaded with money and used for payments, like gift cards.
Smart Cards: Cards that have a microchip embedded for storing and processing information. Smart cards are one of the accepted PPIs when paying for public transportation.
Online Accounts: A virtual account that contains preloaded funds for online transactions.
How do they work?
Funding: The user puts money into the PPI. Payment options are different, but they are usually cash, debit card or bank transfer.
Transactions: The user makes a payment or transfer, and the amount will be deducted from the balance in the PPI.
No bank account is required to be linked. The user's bank account is not accessed while using the PPI, as can be done with a debit card.
Minimum Requirements of Payment Wallet License
Banks receiving approval from the Reserve Bank of India (RBI) to offer mobile banking transactions will be allowed to introduce mobile wallets and mobile accounts, such as mobile-based prepaid payment equipment.
Companies installed under the Companies Act: A company included under the Companies Act can only issue a prepaid wallet if it is allowed according to the object clause of the Association's Memorandum (MOA).
Mobile service providers are allowed to offer a mobile prepaid plan. This value can be utilised for buying talk time and will be limited to the purchase of additional digital content and services that are beneficial for mobile phones. The purchase of additional goods or services using prepaid value will not be allowed.
Companies that have foreign direct investment must meet the minimum capital requirements set by the FDI policy guidelines.
Documents Needed to be Submitted Along with the Application
Applicant status.
Registration Certificate.
Document of Formation
A comprehensive report outlining the main operation of the company.
Comprehensive overview of the company’s operations.
Financial statement examination report.
Recently reviewed financial statement.
Name and address details of the company bankers.
Payment system details, including process flow, technology, security features, and interoperability.
The company’s expected benefits for the Indian financial system.
The amount of money suggested.
Sources of funds.
Any additional information requested by way of the RBI.
Benefits of Prepaid Wallet License
In the Indian economy, obtaining a prepaid payment instrument license or a payment wallet license is a very beneficial step to run a prepaid payment instrument business. Some of its benefits are as follows:
PPI license guarantees that businesses adhere to the regulatory guidelines.
The introduction of prepaid wallet licenses has resulted in increased accessibility to the financial services market, enabling businesses to offer e-wallets, prepaid cards, and a range of digital payment options.
Companies that possess prepaid payment instrument licenses guarantee the safety and security of customers’ funds, thereby enhancing the reputation and trustworthiness of these businesses.
Line breaks are very crucial and are needed in the output, and we will not tolerate them, no matter what method you use. Prepaid wallet licenses in India also provide convenient and inexpensive fund transfer, as they provide a quick and efficient way to move money.
It improves flexibility in business operations, allowing for customised payment solutions.
With PPI licenses, businesses can partner with banks and other payment service providers, making their network and offerings wider.
Types of PPI for obtaining a Payment Wallet License
According to the Reserve Bank of India (RBI), there are three types of PPI licenses. The list of the three major payment wallet licenses is given below:
1. Closed PPI License:
A closed PPI license or a closed payment wallet license is a type of PPI license that can only be used to purchase in the issuing unit, such as a gift voucher or a rail metro card, which can only be used before the respective store or system. This implies that it has restricted access and is not eligible to use for purchasing items or services from different providers.
Furthermore, it is not possible to withdraw cash from it because the closed-system PPI is not recognised as a payment system by the RBI. Subsequently, they do not need to seek approval from the RBI before issuing.
2. Semi-closed PPI License:
A semi-closed PPI license permits the use of prepaid payment instruments at certain establishments, although not all. This license is given to companies registered under banks, NBFCs and the Companies Act 2013, but it is necessary to obtain prior authority from the RBI. These PPI wallets can be used to purchase goods and services and can only be redeemed at merchants who have agreements with the PPI issuer.
3. Open PPI License
This Creative Commons is an open-access article distributed under the terms of the attribution license, which allows unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
This open PPI license is exclusively granted to banking institutions that have received prior approval from the RBI. This payment card is utilised for buying, transferring money, and withdrawing cash, among other things. Examples include master cards, Visa, and so forth.
Why eStartIndia for Prepaid Wallet License?
Acquiring a Prepaid Payment Instrument (PPI) or Prepaid Wallet License from the Reserve Bank of India (RBI) can be challenging because of complicated legal, financial, and regulatory obligations. eStartIndia, however, makes the process easier by providing comprehensive end-to-end services for startups, fintech companies, and NBFCs venturing to enter the digital payments space and acquire a PPI or prepaid wallet license.
eStartIndia provides a team of qualified legal and compliance personnel to assist in all aspects of the process, from assessing eligibility and collecting the required documentation to business plan creation, completing and submitting the application, which corresponds with the RBI. eStartIndia will work with your company to develop a submission to the RBI that is brief, accurate, and full of required information and that fully complies with RBI guidance, minimising the chances of rejection and costly delay due to incomplete information or a failure to comply with regulatory expectations.
eStartIndia’s transparent fee structure, professionalism, and guidance make it an excellent company. They help you to meet KYC norms, cybersecurity compliance, and capital that matter for licensing approval, hordes. The other compliance work is like GST registration and other regulatory registrations, such as cyber, data, and IT compliance.
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