PREPAID PAYMENT INSTRUMENTS (PPIs)

About:

• Meaning: PPIs are instruments that facilitate purchase of goods and services, including financial services, remittance facilities, etc., against the value stored on such instruments.
  
  
• Examples: Prepaid instruments can be issued as smart cards, magnetic stripe cards, internet accounts, internet wallets, mobile accounts, mobile wallets, paper vouchers and any of the instruments used to access the prepaid amount.
  
  
• Types: PPIs that can be issued in India are classified under three types viz.
  • Closed System PPIs: These PPIs are issued by an entity for facilitating the purchase of goods and services from that entity only and do not permit cash withdrawal. The operation of such instruments doesn’t require approval by the RBI.
    
    
  • Semi-closed System PPIs: These PPIs are issued by banks (approved by RBI) and non-banks (authorized by RBI) for purchase of goods and services at merchant locations which have a specific contract with the issuer to accept the PPIs as payment instruments.
    
    
  • Open System PPIs: These PPIs are issued only by banks (approved by RBI) and are used at any merchant for purchase of goods and services. Cash withdrawal at ATMs / Points of Sale (PoS) terminals / Business Correspondents (BCs) are also allowed through such PPIs.
    
    
  
  
  
• PPI issuer: PPI issuer is an entity operating / participating in a payment system for issuing PPIs to individuals / organisations. The money so collected is used by the entity to make payment to the merchants.
  
  
• PPI Holder: A holder is an individual / organisation who obtains / purchases PPI from the PPI issuer and uses the same for purchase of goods and services.