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What are Prepaid Wallets or Prepaid Payment Instruments?
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What are Prepaid Wallets or Prepaid Payment Instruments?

Pre-paid payment instruments are payment instruments that facilitate purchase of goods and services, including funds transfer, against the value stored on such instruments. The value stored on such instruments represents the value paid for by the holders by

  • cash,
  • by debit to a bank account,
  • or by credit card.

The pre-paid instruments can be issued as


  • smart cards,
  • magnetic stripe cards,
  • internet accounts,
  • internet wallets,
  • mobile accounts,
  • mobile wallets,
  • paper vouchers
  • any such instrument which can be used to access the pre-paid amount (collectively called Prepaid Payment Instruments hereafter).


S.No Type of prepaid payment instruments Description Example
1 Closed System Payment Instruments These are payment instruments issued by a person for facilitating the purchase of goods and services from him/it. These instruments do not permit cash withdrawal or redemption. As these instruments do not facilitate payments and settlement for third party services, issue and operation of such instruments are not classified as payment systems. Ola Wallet
2 Semi-Closed System Payment Instruments These are payment instruments which can be used for purchase of goods and services, including financial services at a group of clearly identified merchant locations/ establishments which have a specific contract with the issuer to accept the payment instruments. These instruments do not permit cash withdrawal or redemption by the holder. Paytm
3 Open System Payment Instruments: These are payment instruments which can be used for purchase of goods and services, including financial services like funds transfer at any card accepting merchant locations (point of sale terminals) and also permit cash withdrawal at ATMs / BCs. BHIM

Capital and Other Eligibility Requirements for Issuing Prepaid Wallet License

S.No Type of Entity Requirement
1 Licensed / Scheduled Banks and Registered Non-Banking Financial Companies (NBFCs) obtaining approval / authorisation from Reserve Bank of India.
2 All other entity minimum positive net worth of Rs. 25 crore as per the last audited balance sheet and the same shall be maintained at all times.
3 Newly incorporated entities which may not have an audited statement of financial accounts shall submit a certificate from their Chartered Accountants regarding the current net worth along with provisional balance sheet. They shall also submit documents in support of the capital infusion and the funds available to undertake this business.
4 Applicant Companies having FDI/FII minimum capital requirement as applicable under Consolidated FDI policy guidelines of Government of India.
5 Non-bank entities applying for authorization company incorporated in India and registered under the Companies Act 1956 / Companies Act 2013 and the Memorandum of Association (MOA) of the applicant entity shall cover the proposed activity of operating as a PPI issuer

Condition to Issue Prepaid Payment Instrument

  • The maximum validity of the pre-paid gift instruments shall be three years
  • Maximum value of each such payment instrument shall not exceed Rs. 50,000/-
  • These instruments shall not be reloadable
  • Cash withdrawal shall not be permitted for such instruments.
  • Full KYC of the purchasers of such instruments shall be maintained
  • The issuer shall maintain the details of the persons to whom such instruments have been issued and make available the same on demand

How Prepaid Wallet is different from Digital Wallet?

digital payment

Digital wallets and prepaid wallets serve different purposes.

In case of a digital wallet, your money continues to remain in your bank account or credit card.

In a prepaid wallet, the money moves from your account to either a merchant’s current account or an escrow account depending on the type of wallet.

Brief Procedure for Incorporation of Prepaid Wallet Business

STEP-1 : – Formation of Company in accordance with the Company act, 2013 by applying to Registrar of Company.

STEP-2 : Filling of Application for authorization in Form A as prescribed under Regulation 3(2) of the Payment and Settlement System Regulations, 2008. With fee to Reserve Bank of India for grant of License.

  • Name of applicant.
  • Constitution of applicant.
  • Address proof of registered office.
  • Certificate of Incorporation.
  • Main business of company.
  • Management information.
  • Statutory auditor of Company.
  • Audited balance sheet.
  • Name and address of bankers of Company.
  • Particulars of payment system including process flow, technology to be used, security features, inter-operability etc.
  • Expected benefits to the financial systems.
  • Operating risks.
  • Amount of finance required.
  • Sources of finance.
  • Amount of own capital proposed.
  • Amount of borrowings expected from banks.
  • Rate of return on investment.
  • Any other information as may be required by RBI.

STEP-3 :  The applications shall be initially screened by RBI to ensure prima facie eligibility of the applicants

STEP-4 :  Subject to meeting the eligibility criteria and other conditions, the Reserve Bank of India issues an ‘in-principle’ approval. The validity of in-principle approval issued by RBI shall be six months from the date of granting such in-principle approval.

STEP-5 : The entity shall submit a satisfactory System Audit Report to RBI within these six months, failing which the in-principle approval shall lapse automatically. An entity can obtain one-time extension of six months by making a request in writing in advance with valid reasons. The RBI reserves the right to decline such request for extension.

STEP-6 : After consideration of all the particulars furnished by  entities granted final authorization shall commence business within six months from the grant of Certificate of Authorization failing which the authorization shall lapse automatically.

STEP-7 :  The Certificate of Authorisation shall be subject to review and shall be valid for five years unless otherwise specified

Some Authorized Prepaid Payment Instruments in India

S.No Name of the Authorised Entity Name of Payment Instrument Authorised
1 One Mobikwik Systems Private Limited ‘Mobikwik Wallet’
2 Oxigen Services (India) Pvt. Ltd. ‘OxiCash Cards’
3 Smart Payment Solutions Pvt. Ltd ‘SmartPaisa’
4 ZipCash Card Services Pvt. Ltd. ZipCash Coupons
5 Pyro Telecommunications Ltd. SpeedPay