All About New Payment Wallet License Under PPI

  • September 28, 2023
  • Registrationwala
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Anyone who wants to launch a payment wallet system in India has to obtain a Payment Wallet License, also known as a Certificate of Authorization. The Reserve Bank of India provides a license as per the Payment & Settlement Systems Act. After the demonetization, the RBI encouraged the usage of cashless money transfers through prepaid wallets. 

The prepaid wallets are prepaid payment instruments, and with the help of these buy goods and services. Basically through this device, you can access a pre-paid amount. In India, the usage of these wallets has increased in previous years in the form of mobile wallets, smart cards, magnetic stripe cards and paper vouchers. As per RBI, the Year-over-Year (YoY) growth of PPI is 6.83% in August 2023. 

Old Classification of PPIs

As per the regulations of 2017, the PPI was divided into three categories:

1. Closed System PPI: It is used to purchase goods and services from a company only.

2. Semi-Closed PPI: It is used to purchase goods and services such as financial services, remittance facilities, etc.

3. Open PPI: It is issued by a bank and only usable at any merchant.

Note: The RBI is not responsible for the supervision and regulation of closed-system PPIs. As per the regulations of PPI, their issuance is not considered as a part of the payment system which needs to be authorised by RBI. There were conflict that the PPI was required to comply with the regulations of 2017 or not. So, it is clarified now that RBI does not monitor or oversee any PPI which is issued and redeemed by the same firm.

New Categories of PPI for Obtaining Payment Wallet License

As per the Master Direction of RBI which was released on November 12, 2021 and updated on February 10, 2023. The changes in types of PPI are mentioned below:

Small PPIs (or Minimum-detail PPIs)

1. PPI up to Rs. 10 thousand (with cash loading facility)

The banks and non-banks will be permitted to issue these PPIs after getting the minimum information of PPI holders. The details include mobile number verified with One Time Password (OTP), self-declaration, identification number of any mandatory document or ‘Officially Valid Document’ or any other document with any name listed for this purpose in the Master Direction on KYC which is amended from time to time.

The nature of these PPIs is reloadable in nature and the amount loaded in a month should not exceed the limit of Rs. 10,000/- or the total amount loaded annually should not exceed the amount of Rs. 1,20,000/-.

PPI up to Rs. 10 thousand (with no cash loading facility)

This PPI is also reliable in nature but the loading and reloading can only be done from a bank account, credit card or full-KYC PPI. The amount loaded in a month should not exceed the limit of Rs. 10,000/- or the total amount loaded annually should not exceed the amount of Rs. 1,20,000/-. 

The outstanding amount should not exceed Rs. 10,000 at any time. So, these PPIs should be used only for the purchase of goods and services and cash withdrawal or funds transfer from such PPIs is not permitted.


Banks and non-banks are permitted to issue such PPIs after completing the KYC of the PPI holder. The Video-based Customer Identification Process (V-CIP) should be used to open full-KYC PPIs as well as to convert Small PPIs into full-KYC PPIs. So, these PPIs are reloadable in nature and the amount outstanding should not exceed Rs.2,00,000/- at any point in time.

The funds of PPI can be transferred ‘back to source account’ or ‘own bank account of the PPI holder’. However, the PPI issuer must set the limits as per the risk profile of the PPI holders, other operational risks, etc. Also, the facility of ‘pre-registered beneficiaries’ should be provided to register the beneficiary by adding their bank account details, details of PPIs issued by the same issuer, etc.

Special Categories of Prepaid Payment Instruments

The banks and non-banks are not allowed to issue PPIs of any other category except those which are permitted under the following categories:

Gift PPIs

The maximum value of each prepaid gift should not exceed the limit of Rs.10,000/-. Also, these instruments are not reloadable, and cash or fund transfer is not allowed. The funds can be transferred back to the source account after getting the consent of the PPI holder. KYC details of the purchaser can maintained by the PPI issuer. 

However, doing a separate KYC is not required for customers who are issued such instruments against debit to their bank accounts or credit cards in India. The features of such PPIs should clearly communicated to the PPI holder by SMS, e-mail, or any other means at the time of issuance of the PPI, before the first loading of funds.

Validity of Prepaid Wallet License

  • The minimum validity of a prepaid wallet license is one year from the date of last loading or reloading. The longer validity of the PPI will depend on the issuers.
  • When the instrument expires, the outstanding sum in the instrument will be instantly cancelled. Each month, a maximum of 10% will be deducted from the outstanding amount. The expiry date of the payment instrument will be reminded to holders in advance. 
  • The validity of the Certificate of Prepaid Wallet Licence is 5 years unless. It can be cancelled anytime, however, everything is subject to review.
  • A new card will be issued to the consumer on the expiry date with a new date written on the new PPI card.

Benefits of Prepaid Wallet License

The government of India took a great step by introducing the prepaid wallet license in the Indian economy. Some of the benefits are as follows:

  1. No issue of loss or stolen as it is an intangible asset.
  2. The payment of denomination amount becomes easier such as Rs. 348.96. Paying this amount in cash is not possible as now the small currency of 1 paise, 25 paise and 50 paise doesn’t work.
  3. Prepaid wallets are faster than internet banking transactions.
  4. No hidden charges are included in the payments. Don’t need to pay service charges, activation fees, monthly or annual charges.
  5. Auto-pay is possible in case of monthly bills, and EMIs. 
  6. Prepaid wallets are password protected, and no need to provide too many details to open an online prepaid wallet system.
  7. Lastly, incentives and rewards on transaction or if referred to any friend or family member. This is not possible in a physical wallet.


To conclude, the Prepaid Payment Instruments become a new way to transfer money. It is not present in a physical form, so there is no issue of lost or stolen. Also, the money can be transferred fast, anytime and from anywhere. The prepaid payment instruments are growing and will reach the major part of the market. So, if you also want to start a prepaid payment system, apply for a prepaid payment license as it is necessary as per the RBI.


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