{"id":6857,"date":"2019-10-25T10:33:44","date_gmt":"2019-10-25T05:03:44","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=6857"},"modified":"2021-04-03T16:10:26","modified_gmt":"2021-04-03T10:40:26","slug":"how-to-start-a-prepaid-wallet-license-business-in-india","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/how-to-start-a-prepaid-wallet-license-business-in-india\/","title":{"rendered":"How to Start a Prepaid Wallet License Business in India?"},"content":{"rendered":"\n<p class=\"has-drop-cap\">In recent times, online payments and cashless\ntransactions have gained a lot of popularity owing to the ease with which they\nget done. Nowadays, people hardly carry any cash and prefer making online\npayments. Prepaid Payment Instruments, also known as PPIs, allow the customer\nto do the financial transactions through the value stored in such an\ninstrument. These are also known as e-wallets.<\/p>\n\n\n\n<p>Prepaid Payment Methods are convenient methods that fulfill\nthe target of making a cashless transaction economy, which ensures there remain\ntransparency and accountability in every payment and receipt.<\/p>\n\n\n\n<p>Prior approval of RBI is required to commence and operate the business of prepaid instruments. The detailed process of commencing a <a href=\"https:\/\/swaritadvisors.com\/prepaid-wallet-license\" class=\"text-primary\"><strong>prepaid wallet license<\/strong><\/a> in India has discussed henceforth.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a39fc0a5ad\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a39fc0a5ad\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/how-to-start-a-prepaid-wallet-license-business-in-india\/#Types_of_Prepaid_Wallet_License\" title=\"Types of Prepaid Wallet License\">Types of Prepaid Wallet License<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/how-to-start-a-prepaid-wallet-license-business-in-india\/#Prerequisite_for_Prepaid_Instrument_License\" title=\"Prerequisite for Prepaid Instrument License\">Prerequisite for Prepaid Instrument License<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/how-to-start-a-prepaid-wallet-license-business-in-india\/#Procedure_for_Non-Banking_Entities\" title=\"Procedure for Non-Banking Entities\">Procedure for Non-Banking Entities<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/learning\/how-to-start-a-prepaid-wallet-license-business-in-india\/#Documentation\" title=\"Documentation\">Documentation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/learning\/how-to-start-a-prepaid-wallet-license-business-in-india\/#Utilization_of_Fund\" title=\"Utilization of Fund\">Utilization of Fund<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/learning\/how-to-start-a-prepaid-wallet-license-business-in-india\/#Advantages_of_Prepaid_Wallet\" title=\"Advantages of Prepaid Wallet\">Advantages of Prepaid Wallet<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/learning\/how-to-start-a-prepaid-wallet-license-business-in-india\/#Conclusion\" title=\"Conclusion\u00a0\">Conclusion\u00a0<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Types_of_Prepaid_Wallet_License\"><\/span>Types of Prepaid Wallet License<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>RBI has classified prepaid wallet into the following types:<\/strong><\/p>\n\n\n\n<ul><li><strong>Closed\nWallet: <\/strong>These wallets are issued to the customer by an entity being\nindividual, sole proprietorship, partnership, etc., for making payment to them\nfor the purchases of goods and\nservices. These instruments cannot be used to make payments to the third party. <em>For Example Ola money wallet<\/em><\/li><li><strong>Semi-Closed\nWallet: <\/strong>These wallets are utilized for the purchase of goods and\nservices from the group of vendors\naccepting such modes of payments. For example, booking a movie at PVR who accepts Paytm. Entities are\npermitted to carry on the business of a semi-closed wallet by obtaining the\nlicense from RBI.<\/li><li><strong>Open\nWallet: <\/strong>This wallet allows the holder of such instruments to purchase\ngoods and services, fund transfer,\nand cash withdrawal from ATMs. These wallets get issued by banks and include\nVisa, Master cards, etc.<\/li><li><strong>Cross\nborder transactions: <\/strong>FEMA authorizes individuals to issue prepaid wallets\ndenominated in Foreign Exchange that doesn&#8217;t attract the provisions of these\nguidelines as per RBI. These instruments are limited to INR 5000 for each cross\nborder transactions.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Prerequisite_for_Prepaid_Instrument_License\"><\/span>Prerequisite for Prepaid Instrument License<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Following are the conditions laid down by RBI which one needs to fulfill for obtaining the license of Prepaid Payment Instrument:<\/strong><\/p>\n\n\n\n<ul><li>Every entity that seeks approval to do the business of Prepaid Wallet Instrument shall maintain the minimum positive net-worth of INR 25 Crore as per its latest audited balance sheet.<\/li><li>Earlier registered PPIs license got canceled if they fail to increase their limit of minimum net worth as per these guidelines by the 30th of September, 2020.<\/li><li>Net-Worth shall be the sum of the following items:<\/li><\/ul>\n\n\n\n<p><p style=\"padding-left: 30px;\">\u2714 Paid-up equity capital<\/p>\n<p style=\"padding-left: 30px;\">\u2714 Preference shares<\/p>\n<p style=\"padding-left: 30px;\">\u2714 Free reserve<\/p>\n<p style=\"padding-left: 30px;\">\u2714 Share premium<\/p>\n<p style=\"padding-left: 30px;\">\u2714 Capital reserve.<\/p><\/p>\n\n\n\n<ul><li>This requirement of minimum net worth needs not to be fulfilled by schedules banks or NBFCs registered with RBI. The supervisory department of RBI grants the authorization to banks\/NBFCs who seeks approval for the issue prepaid instrument.<\/li><li>Newly registered companies need to submit a declaration from a chartered accountant relating to the company&#8217;s current net worth. These entities have to provide provisional balance sheets as well as supporting documents relating to capital or fund acquired to start the business.<\/li><li>An entity seeking approval from RBI shall get registered under the Companies Act, and the object clause of such entity shall authorize the Company to operate as PPI issuer.<\/li><li>In the cases where there is a change in the management of the company as a result of takeover, acquisition, merger, or due to other similar activities needs to take written approval from RBI.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Procedure_for_Non-Banking_Entities\"><\/span>Procedure for Non-Banking Entities<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Following are the detailed steps to be followed by every non-banking entity for seeking approval for the grant of license:<\/strong><\/p>\n\n\n\n<ul><li>Apply in form A along with necessary documents (as mentioned below) as per the Payment &amp; Settlement System Regulations 2008.<\/li><li>RBI on receipt of such an application, scrutinizes the eligibility of an applicant.<\/li><li>RBI verifies fit and proper status of an applicant through the feedbacks of regulators, government authorities, etc.<\/li><li>RBI can also access the application based on other criteria such as customer services, technical efficiency, etc.<\/li><li>If the application is not justifiable or <strong><a href=\"https:\/\/www.rbi.org.in\/Scripts\/BS_ViewMasDirections.aspx?id=11142\">RBI<\/a><\/strong> is not satisfied can reject the same.<\/li><li>If RBI accepts the application because every condition is fulfilled and satisfied, RBI shall grant in-principal approval that is valid for 6 months.<\/li><li>Satisfactory Audit Report shall be submitted by an applicant within 6 months of receipt of in-principal approval, failing which such approval will lapse.<\/li><li>On receipt of final approval, the entity shall commence its business within 6 months of approval; otherwise, authorization shall lapse.<\/li><li>Certificate of Authorization remains valid for 5 years, which can be renewed provided the applicant needs to apply 3 months before the expiry of the license.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Documentation\"><\/span><strong>Documentation<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Following documents need to be attached with Form A for applying for prepaid wallet license:<\/strong><\/p>\n\n\n\n<ul><li>Details of the applicant such as PAN, Aadhar, Residential Address proof, Contact number, Email Id.<\/li><li>Constitution of an applicant such as private limited, public limited, OPC, etc.<\/li><li>Certificate of Incorporation of a company.<\/li><li>Main business activity of the company as per its Object clause in MOA.<\/li><li>Information relating to management, directors, employees, and other key people responsible for the operational activity of the company.<\/li><li>Audited balance sheet and provisional balance sheet (in case of a new company).<\/li><li>Details of the bankers of the company.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Utilization_of_Fund\"><\/span>Utilization of Fund<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Funds collected for the issuance of e-wallet plays a\ncrucial role. If the payment gets settled with\ncertainty and on time, the confidence of the public and merchants, is\nenhanced on e-wallet methods of payment. Any entity that issues the e-wallet\nshall keep in reserve an outstanding balance in an escrow account opened with a\nseparate schedule bank. Such an account shall be\nmaintained with only one bank at a time, and the transfer of account\nfrom one bank to another shall be time-bound with minimal effect on the payment\ncycle.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Advantages_of_Prepaid_Wallet\"><\/span>Advantages of Prepaid Wallet<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Following are the merits of keeping a prepaid wallet:<\/strong><\/p>\n\n\n\n<ul><li>The prepaid wallet can never be lost, damaged, or stolen as compared to a physical wallet.<\/li><li>The problem of cent and change during cash transactions get abolished in payments made through prepaid wallets.<\/li><li>Online payments such as NEFT, RTGS, or other bank transfer take so much of time as it needs several details to add beneficiary, and also, the fund can be transferred only after prescribed time after adding such beneficiary. However, e-wallet is quick and time-bound. For example, Phone Pay needs the only account number and IFSC code to add as a beneficiary for payment transfer. And in the case of the registered PhonePay user, the fund can be transferred by entering the recipient mobile number.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion\u00a0<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"shadow4\">Digital Payments through payment gateways are\ntransparent, accurate, and more reliable. From online recharge to buying goods\nand services, these wallets can be used with ease. It is an upcoming business\noption that is gradually gaining popularity.<\/div>\n\n\n\n<div class=\"read\"><p><b>More info:<\/b> <mark><a href=\"https:\/\/swaritadvisors.com\/learning\/semi-closed-wallet-license\/\">Semi-Closed Wallet License<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>In recent times, online payments and cashless transactions have gained a lot of popularity owing to the ease with which they get done. Nowadays, people hardly carry any cash and prefer making online payments. Prepaid Payment Instruments, also known as PPIs, allow the customer to do the financial transactions through the value stored in such [&hellip;]<\/p>\n","protected":false},"author":11,"featured_media":6868,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[555,544],"tags":[958],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/6857"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=6857"}],"version-history":[{"count":22,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/6857\/revisions"}],"predecessor-version":[{"id":18500,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/6857\/revisions\/18500"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/6868"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=6857"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=6857"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=6857"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}