News:The Reserve Bank has introduced a new type of prepaid payment instrument (PPI) for daily digital payments.
Facts:
Features of PPI introduced by RBI:
- The prepaid payment instrument(PPI) could be used only for purchase of goods and services up to a limit of ₹10,000 per month.
- PPIs shall be issued by bank and non-bank PPI issuers after obtaining minimum details of the holder.
- The amount loaded in such PPIs during any month shall not exceed ₹10,000 and the total amount loaded during the financial year shall not exceed ₹1,20,000.
- The PPI issuers shall provide an option to close the instrument at any time and also allow to transfer the funds ‘back to source’ at the time of closure.
About Prepaid Payment instrument(PPI):
- Prepaid Payment instrument(PPI) are financial instruments that facilitate the purchase of goods and services against the value stored on such instruments.
- These are generally issued in the form of smart cards,mobile wallets, paper vouchers,internet accounts/wallets.
- These payment instruments are licensed and regulated by the Reserve Bank of India.
Types of PPIs:
Closed system PPI:
- Closed system PPI can be used only at specific locations, and cannot be used to transfer funds from one account to another.
- The most common example of a closed system PPI is a brand-specific gift card.
Semi-closed PPI:
- Semi closed PPIs are not restricted to a single entity.Instead,these can be used for purchase of any kind of goods and services from a merchant, as well as to transfer money to someone.
- The examples of semi-closed PPI are e-wallets like Oxigen and Mobikwik.
Open system PPI:
- The open system PPIs can be issued only by banks and can be used at any merchant outlet for any purchase or cash withdrawal.
- A travel card is a type of open system PPI.It can be used for all types of spending and for cash withdrawal from ATMs.
