Prepaid or payment wallets have been classified into four categories by the RBI:

• A. CLOSED SYSTEM PAYMENT
• B. SEMI-CLOSED SYSTEM
• C. OPEN SYSTEM

➲ Closed system payment:

It is a wallet which is issued by a company to a consumer for buying goods and services exclusively from that company. Example: Amazon, Cleartrip etc

Investment Companies are those which carry out trading of securities on listed exchanges as a primary business and are also involved in NBFC operations.

You can use this

a. To receive refunds for receive and receive cashback

b. You can do purchasing

Semi-closed PPIs can further be classified into the following three types:

• i. PPIs upto ₹ 10,000/- where minimum details of PPI holder are obtained (minimum-detail PPI)
• ii. PPIs upto ₹ 10,000/- with loading only from bank account
• iii. PPIs upto ₹ 1,00,000/- where KYC of PPI holder is completed (full-KYC PPI)

➲ Open system payment:

It is used to purchase of goods and services and also permit cash withdrawal at ATM. Example- Visa card, Master card, Rupay card.

You can use this

• a. For cash withdrawal at ATM
• b. Payment(s) made on purchase of goods and services by swiping card(s)
• c. Use through POs machine for making payment

➲ Semi-Closed system payment:

Semi-closed wallets refer to those wallets that can be used to purchase goods and/or services as such a wallet is a payment instrument that are redeemable of clearly identified merchant that contract specifically with the issuer to except the payment instrument. Example- Paytm, Mobikwik, Freechare etc.

You can use it

• a. Pay to affiliated merchant for purchasing goods
• b. Purchase from wallet issuer
• c. transfer money

• ➲ Commercial Banking institutions and NBFC’s (Non-Bank Finance Companies) which comply with the Capital Adequacy requirement laid down by the Reserve Bank of India from time-to-time shall be permitted to issue prepaid payment instruments.
• ➲ Entities other than a bank or NBFC shall have a minimum net owned funds of Rs 5 crores in order to attain a prepaid wallet license.

• ➲ Name of the applicant Entity
• ➲ Constitution of the applicant Entity
• ➲ Address proof of registered office of the business
• ➲ Certificate of Incorporation
• ➲ A detailed report of the principle business of the company
• ➲ Benefits expected to the Indian Financial system from the company
• ➲ List of Directors and List of Shareholders
• ➲ Details of statutory auditor of Company
• ➲ Quantum of capital proposed
• ➲ Details of sources of funds
• ➲ Latest audited balance sheet of the Company
• ➲ Payment system details with process flow, technology, security features and interoperability
• ➲ Details of Bank Account and Bankers of Company
• ➲ Any other documents as may be required

1st STEP:

Incorporation of the Company under the Company act, 2013 with main objects in consonance with that of a prepaid payment instrument.

2st STEP:

Preparation and filing of Application for Payment Wallet Licence in Form A with the payment of adequate fee as prescribed under the Payment and Settlement System Regulations, 2008.

3st STEP:

The application so filed undergoes the process of initial scrutiny of the application by the RBI to ensure the correctness of the application and the attachments filed and eligibility of the Company and its promoters and directors.

4st STEP:

Subject to completion initial scrutiny to the satisfaction of the RBI, the designated office of the Reserve Bank of India issues an ‘in-principle’ approval which shall be valid for 6 months.

5st STEP:

The entity receiving the “in-principle” shall mandatorily submit a Systems Audit Report to RBI within these 6 months, otherwise, the in-principle approval shall be deemed to lapse on expiry of 6 months. There is a provision to obtain a one-time extension of six months by such applicant, which shall be approved only if there is a genuine reason for the delays caused. The RBI has the discretion to the accept or decline such request for extension based on the reasons stated.

6st STEP:

5st STEP:

If the RBI is of the view that the specifics and facts provided by the applicant in the application are satisfactory and as per the respective provisions, the RBI grants the Certificate of Registration to the applicant within the six months of in-principle approval. However, if the Certificate of registration is not granted, then the in-principal approval shall lapse at the completion of 6 months. The Certificate of Registration granted by the RBI is valid for 5 years and shall be subject to a periodic review