What is Prepaid Payment Instruments, What is PPI: Prepaid Payment Instrument (PPI) has been introduced under the Payment and Settlement Act of 2005 of the Reserve Bank of India (RBI) as a means of payment that facilitates the purchase of goods and services. PPI covers funds transfer, financial services and remittances etc. what is PPI? And a detailed idea about PPI is discussed on our website. Must follow our website to know such various information.
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What is Prepaid Payment Instruments
PPI includes payment wallets, smart cards, mobile wallets, vouchers, etc. A PPI helps you get prepaid payments on any device. In some cases PPI or Prepaid Payment Instrument square measure usually a money preloaded card for the purpose of making a planned payment. Besides, RBI will launch a new prepaid payment instrument for online payments up to Rs.10,000. PPI is detailed on our website, here you can know What is Prepaid Payment Instruments , what is PPI , what are the types of PPI.
What is PPI Full Form ?
PPI Full Form is Prepaid Payment Instrument.
What is PPI ?
Prepaid Payment Instrument (PPI) is coined as a means of payment that facilitates the purchase of goods and services. It is a card preloaded with money for the purpose of paying square measure usually a plan.
Types of PPI
A total of three prepaid payment instruments are available in compliance with RBI.
Closed System – This system is designed to purchase only valid items issued for specific PPIs. This PPI will be invalid when a person tries to buy goods or services from another provider. Similarly, cash withdrawals against PPI balances are also prohibited by law. Prior approval of RBI is not required for issuance of PPI, as this method is not classified as half payment method. The system includes paper vouchers, gifts, certificates, coupons, smart cards that can only be used at issuing facilities like Metro Railcards and Chips.
Semi closed system – closed loop system PPI is useful only in few situations. RBI issues PPIs to banking institutions and non-banking institutions. RBI must approve, RBI approved PPIs will receive approval. This form of agreement can be setup through payment aggregators or payment gateways. As with closed system, semi-closed system also cannot be used for cash withdrawal of PPIs.
Semi Open System – In this payment system, goods and services can be purchased from any merchant that accepts credit cards. The holder of this instrument cannot withdraw in cash.
Open System – Issued only by financial institutions, it can be used for purchases, remittances and withdrawals of any item.
Read More, UPI Transaction Charges From 1 April 2023?
Instructions for issuing PPI
The first things to keep in mind for issuing PPI are-
- Non banking entities like businesses must meet the following criteria.
- The firm must be registered in India.
- The minimum paid up capital of the company should be more than 5 crores.
- You must maintain a net worth of Rs.1 Crore.
- PPI can be issued in respect of any bank only if it fulfills the eligibility conditions of RBI. Only those banks approved by RBI are allowed to facilitate mobile banking transactions.
- PPI can be issued only by non-banking institutions and by corporations in a closed system or semi-closed system.
- Mobile service providers can issue prepaid mobile value. Such prepaid value as a payment instrument other than talk-value should be limited to the purchase of such value-added digital content or services for use on mobile phones. Prepaid cell phones cannot be used to purchase other products or services.
In recent times, due to demonetization, the business of instruments has increased significantly. The amount of transactions conducted through it has also increased a lot. Less than 10 crores were traded in July 2016. The number crossed 27 crore by July 2017 using PPI.