How to Start a Prepaid Wallet License

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An Overview of Prepaid Wallet License

The Payment & Settlement Systems Act mandates that anybody wishing to launch a payment wallet system in India get the Payment Wallet Licence, also known as the Certificate of Authorization, from the Reserve Bank of India. The RBI has encouraged the usage of cashless money transfers for all financial reasons since the implementation of demonetization. Such financial tools as prepaid wallets assist in carrying or transferring money in digital form. The Reserve Bank of India is in charge of granting licences for prepaid wallets in India.

Because prepaid wallet licences are prepaid payment instruments (PPIs) that make it easier to buy goods and services and transfer money against the value saved on such instruments, many new and current companies in India are continually applying for them.

Prepaid payment instruments (PPIs) are any devices that can be used to access a pre-paid amount. In India, these devices include mobile wallets, smart cards, magnetic stripe cards, and paper vouchers.

What are the Types of PPIs in India?

Old Classification of PPIs:

According to the 2017 Regulations, PPIs were divided into three categories: 

  • Closed System PPIs (used to facilitate the purchase of goods and services from that Company only).
  • Semi-Closed PPIs (used to facilitate the purchase of goods and services, such as financial services, remittance facilities, etc.).
  • Open PPIs (issued by banks only and usable at any merchant). 
  • The Reserve Bank of India is not responsible for regulating or supervising Closed System PPIs since, according to the PPI Regulations, their issuance is not considered to be part of a payment system that needs RBI authorization. 
  • The industry will accept this clarification because there were conflicting opinions on whether Closed System PPIs were required to comply with the Regulations, 2017 even if they didn't need authorization or approval. Therefore, the RBI does not monitor or oversee any PPIs that are issued and redeemed by the same firm.

Introduction of New Classification of PPIs:



Small PPI (with cash loading and without cash loading)

Full KYC

Gift Cards

MTS or Mass Transit System


These PPIs are only valid for the purchase of goods and services at a specific list of businesses or retailers.

It can be used to transfer money or withdrawal cash, as well as to buy goods and services from various vendors.

It can be purchased by one person and redeemed by another person or group of individuals of specified businesses or merchants.

It can be utilised at Mass Transit Systems to collect fares and at merchant outlets that conduct their operations within MTS boundaries.


Within 24 months of the issue date, small PPIs with loading options must be converted into full KYC PPIs; Otherwise, no credits are allowed.

Conversion is not allowed for small PPIs with no cash loading options

Not allowed

Not allowed

Not allowed

Cash Withdrawal or Fund Transfer

Cash withdrawal or fund transfer is not allowed in both cash loading and non-cash loading small PPIs.

For PPIs issued by banks, there is a restriction of Rs.2000 per transaction and a monthly limit of Rs. 10,000 applied to all locations.

PPIs issued by non-banks are limited to a maximum of Rs.2000 per transaction and a total of Rs. 10,000 each month.

Not allowed

Not allowed

Monthly or Yearly Loading Limits

Monthly - Rs.10,000

Yearly - Rs.1,20,000

There is no separate limit the PPI issuer may decide.

The maximum the amount shall not exceed Rs.10,000.

There are no separate limit the PPI issuer may decide.

Outstanding Amount Limits

Outstanding Amount Limits at any point of time in both cash loading and non-cash loading PPIs shall not exceed Rs.10,000.

The amount outstanding at any point in time shall not exceed Rs. 2,00,000.

Not allowed

It shall not exceed the limit of Rs.3,000.

Limits of Fund Transfer

Not allowed

The monthly limit of fund transfers to pre-registered beneficiaries is Rs. 2,00,000 per beneficiary.


The limit is set at Rs. 10,000 per month for all other situations. 

Not allowed

Not allowed




They can choose to offer interoperability, but it is not mandatory.

Exempted from providing interoperability.

Requirements for Issuance of Prepaid Wallet License


The following conditions must be met before a Prepaid Wallet Licence may be issued in India:


  • After receiving a Payment Wallet Licence from RBI, non-banks that meet the requirements, including those outlined by the regulatory department of the RBI, are allowed to issue PPIs.
  • The non-bank entity must be a legally recognised company in India as defined by the Companies Act of 2013 to seek authorization.
  • The capital criteria outlined in the FDI policy guidelines of the Government of India must also be met by non-bank organisations that have foreign portfolio investment (FPI), foreign direct investment (FDI), or foreign institutional investment (FII).
  • The MoA (Memorandum of Association) of the non-bank entity shall cover the proposed activity of PPI issuance.
  • All non-bank entities wanting Prepaid Wallet License from RBI under the PSS Act shall have a minimum net worth of Rs. 5 crores as per the latest audited balance sheet during submission of the application. They shall submit a certificate from their CA to evidence compliance with the applicable net-worth requirement while submitting the application for authorisation and this application shall be processed by RBI. Later, by the end of the Financial Year (F.Y.) from the date of getting final authorisation, they shall achieve a minimum net worth of Rs. 15 crores.
  • The organisation must attain a minimum net value of Rs. 15 crores for the financial position as of March 31, 2023, if it receives final authorization on March 1, 2021. Authorised non-bank PPI issuers are required to submit a net worth certificate every year in the enclosed format to demonstrate compliance with the net worth requirement as per the audited balance sheet of the F.Y. within six months of the completion of that F.Y. Similarly, if the entity received final authorization on May 01, 2021, it shall achieve a minimum net worth of Rs. 15 crores for the financial position as of Mar 31, 2024.
  • Newly registered non-bank entities that are not required to have an audited statement of financial accounts must also provide a provisional balance sheet and a certificate from their CA stating the current net worth.

Procedure for Prepaid Wallet License

The steps to obtain a Prepaid Wallet Licence in India are as follows:

Step 1: The first step in obtaining a Prepaid Wallet Licence is to submit an Application in Form A to the Reserve Bank of India with the required government fee, all necessary documentation, and the approval or authorisation requested under Regulation 3(2) of the Payment & Settlement System Regulations, 2008.

Step 2: The RBI must carry out the screening procedure to confirm the applicant's eligibility. The applicant's eligibility is also verified by the RBI. Entities whose applications do not satisfy the requirements or whose applications are incomplete or do not follow the approved format and contain all information will be returned without the application fees. 

Step 3: Before awarding in-principle clearance to the applicants, RBI must apply checks, among other things, on aspects like customer service & efficiency, technical and other relevant criteria, safety, and security concerns.

Step 4: Within six months, the Company must provide RBI with a satisfactory System Audit Report (SAR). The in-principle permission must be submitted by the Company; otherwise, it will automatically expire. By submitting a written request in advance with all the necessary justifications, the Company may be granted a single, six-month delay for the submission of SAR. 

Step 5: The Company will receive a Prepaid Wallet Licence after taking into account all the information provided by entities. The Company must launch its operations within six months of receiving the award.

Validity of the Prepaid Wallet License

  • The minimum validity term for all PPIs issued in the nation is one year from the date of the last loading or reloading of the PPI. It is up to PPI issuers whether to offer PPIs with longer validity.
  • The consumer will have the option to request a new card if the PPI is issued in the form of a card (with the validity time noted on the card).
  • When a payment instrument expires, the outstanding sums in that instrument are not instantly cancelled. 10% of the outstanding value may be subtracted from the value each month, up to its maximum. The expiration of the payment instrument's validity may also be properly reminded to the holders in advance.
  • Unless otherwise stated, the Certificate of Prepaid Wallet Licence should be valid for 5 years. The Certificate of Prepaid Wallet Licence may be cancelled, however, everything is subject to review.

Measures to Prevent Money Laundering

To tackle the problem of money laundering, the Department of Banking Regulation (DBR), which reports to the Reserve Bank of India, has released some instructions in their "Master Direction- KYC (Know Your Customer)". These rules, which apply to all businesses and their agents engaged in the issuance of Prepaid Payment Instruments, include AML (Anti-Money Laundering), KYC (Know Your Customer), and CFT.

Prevention of Frauds and Security Standards

To reduce the danger of fraud and guarantee complete client protection, PPI issuers need a safe and efficient risk management system. Additionally, the PPI issuers must provide not only accurate information but also methodologies and data security mechanisms for the detection and prevention of fraud.

The framework that PPI issuers must adhere to handle the security and safety issues is as follows:

  • If PPI issuers in prepaid wallets offer the same login credentials for both PPI and other services offered, they must notify the consumer via SMS, mail, or email. Additionally, they must promptly offer the opportunity to log out of the mobile account. PPI Issuers must also implement the necessary procedures to prevent repeated unsuccessful attempts to access or log into the PPI. These techniques include a timeout or inactivity feature; a system where each subsequent payment transaction in the wallet is validated by the customer's agreement; and
  • Any card issued by PPI issuers, whether real or virtual, must contain AFA (Additional Factor of Authentication), which is required for debit cards. The PPI Issuers must offer the Customer Induced Options for Setting a Limit on Transaction Value for Different Transactions and the Number of Transactions; however, it will not be necessary in the case of PPIs issued under PPI-MTS. Issuers must establish a cap on the number of beneficiaries that may be added to a PPI in a day; However, customers must be permitted to adjust the caps with further validation and verification;
  • When a beneficiary is added, Issuers must implement an alert system. PPI Issuers must have a system to deliver notifications when transactions using Prepaid Payment Instruments are complete. Following completion of the specified transaction, the notifications must additionally include information about the credit or debit available balance or remaining balance in the wallet. Issuers must put up a mechanism to monitor the number of operations carried out in a PPI every day/per beneficiary.
  • Along with loading or reloading funds into the prepaid wallet, issuers are required to use an appropriate device to detect, prevent, and limit the occurrence of fraudulent transactions. Issuers are also required to set up an appropriate internal and external escalation system in case of suspicious actions, in addition to warning customers about such transactions.

Consumer Protection and Grievance Redressal Framework

All prepaid payment instrument providers in India are required to clearly and simply state the following important terms and conditions:

  • Any fees associated with using the prepaid wallet devices;
  • The prepaid instrument's expiration date as well as the criteria and terms surrounding it;
  • The contact information for customer assistance, including the website address.

The PPI issuers are required to establish a formal, openly accessible customer grievance redressal mechanism and appoint a Nodal Officer to oversee customer complaints, escalation processes, and turnaround times. If offered on a mobile device or website, the complaint registration feature must be simple for customers to use. The following can be used to summarise the components of the framework:

  • The PPI issuers are required to disseminate information about their consumer protection and grievance procedure in simple language (ideally in Hindi, English, and the local tongue).
  • On mobile wallet apps, websites, and cards, issuers of prepaid payment instruments must include contact information for customer service, including further information about Nodal Officials for Customer's Grievance Redressal (email address, postal address, telephone numbers, etc.).
  • PPI agents are required to display the accurate identification of the prepaid instrument's issuer and the clients' contact information.
  • PPI issuers are required to offer distinct complaint numbers for filing/registering complaints and services to follow up on client complaints.
  • Prepaid wallet issuers are required to take prompt action to address any consumer complaints or grievances, preferably within 48 hours. Additionally, these issuers must respond to the complaint within 30 days of receiving the grievance or complaint.
  • PPI On the website and mobile application, Issuers must additionally show a full list of the individuals they have designated or authorised, including their name, address, contact information, agent ID, etc.
  • PPI issuers are required to raise customer knowledge of the need for password security, the secure and safe use of PPIs, the procedures to be followed in the event of card or authentication data loss or theft, the detection of abuse or fraud, etc.

Transactions Across Borders

According to a notification from the RBI, those people or organisations that are permitted to issue PPIs (Prepaid Payment Instruments) with foreign currency under the Foreign Exchange Management Act of 1999 are exempt from the PPI rules. Additionally, these businesses are only permitted to transact in foreign currencies up to a maximum of Rs 5000.


Technical compatibility allows a payment system to work with other payment systems. This is known as interoperability. PPI issuers must follow the technical requirements established by the National Payments Corporation of India (NPCI) and the relevant card networks to achieve interoperability through UPI and card networks. PPI issuer participation in UPI and card networks will be made easier by NPCI and card networks.

Documents Required for Obtaining a Prepaid Wallet License

To obtain a licence for a payment bank or prepaid wallet, you should provide the following reports:

  • Name of the Applicant 
  • Address proof of Registered office
  • Declaration of Incorporation 
  • A full report on the entity's main operations 
  • Administrative Information
  • Attorney-auditor for the business
  • The financial year's audited balance sheet
  • Name and address of the Company's Bankers
  • Proposed Capital Amount 
  • Expected Benefits to the Indian Financial System
  • Sources of Finance
  • Additional data required by RBI

Benefits of Having a Prepaid Wallet License

The upsides of keeping prepaid wallet License or prepaid wallets are as per the following:

  • Prepaid wallets are safeguarded inside the mobile device and cannot be taken or lost, unlike physical wallets, which occasionally go missing or taken.
  • If payments are made using online prepaid wallets, the problem of progress money that is frequently encountered is removed.
  • Even online-based payments, like web banking, require a lot of information, and in particular banks, the money can only be transferred after 24 or 12 hours of adding the recipient. These wallets do not have this problem because money can be moved instantly.
  • Running these wallets comes at no additional cost or very little cost. Initiation fees, ongoing monthly fees and annual fees for IMPS in web banking, as well as the annual fee for cheque cards, are not required.
  • Additionally, these wallets offer incentives and rewards for mentioning someone.
  • It is not difficult to stuff money into these wallets. Through net banking and debit cards, money may be quickly added to these wallets.
  • Working folks who typically forget their payment due dates benefit from the auto-compensating feature of these wallets.

How Swarit Advisors will Help You?

You will get professional advice and complete online support for the process of getting the license. Our end-to-end compliance solutions and application status tracking will help you in an easy process. The following are some of the highlights:

  • Resolution of all queries regarding documents and procedural requirements. Assistance from beginning to end in obtaining a PPI licence from RBI. Complete assistance with the creation of business plans, IT planning, and application filing.
  • Your documents and the data needed for incorporation will be collected by us. A member of our expert staff will get in touch with you to request more information and documentation, as necessary.
  • To promote openness, we provide clear and realistic estimates of the expenses, papers, and requirements for the entire procedure before we begin.
  • We don't spend any time preparing and filing your application after gathering the required paperwork. It is brought to your knowledge that your application is processing.
  • Upon successful conclusion of the case, we provide you with both electronic and hard copies of all pertinent documents.

Frequently Asked Questions

PPIs are tools that make it easier to pay for products and services, conduct financial transactions, enable remittance services, etc. using the value they store.

The phrase "PPI Licence" refers to a licence granted to the tools that make it easier to transfer money, buy products and services, etc.

Banks and non-banks both issue PPIs when the Know Your Customer (KYC) process is finished with the PPI holder. These PPIs can be used to make cash withdrawals, fund transfers, and purchases of goods and services.

To issue prepaid payment instruments (PPIs) in India, a company must be formed in India, have a minimum paid-up capital of Rs. 5 crore, and maintain a minimum net worth of Rs. 5 crore. By the conclusion of the third financial year after authorization, the company must have a net worth of INR 15 crore.

The RBI has the following requirements for obtaining a prepaid wallet licence:

  1. According to the Companies Act of 2013, incorporate your firm as a company.
  2. Submit the prepaid wallet application using FORM A.
  3. File the application and the necessary documents.
  4. The application will be reviewed by the RBI
  5. The RBI will give you an "In principle" after accepting your application; this is the nodof permission.
  6. You, the applicant, are required to provide the RBI with a good audit report following approval.
  7. The audit report, supporting papers, and your initial application will then be examined by the RBI.
  8. You will receive Prepaid Wallet Approval if the RBI is satisfied with the reports, application, and supporting documentation.

Both banks and non-banks may issue PPIs. PPIs can be issued by banks with RBI authorisation. Companies incorporated in India and registered under the Companies Act, 1956/2013 are non-bank PPI issuers.

PPI transactions involve prepaid payment methods like mobile wallets, gift cards, and other online payment methods, whereas UPI transactions are real-time transfers between two bank accounts.

The phrase "M” Wallet" refers to a mobile wallet that holds data and payment card information on a mobile device.

To obtain a prepaid wallet licence, a business must register with the Companies Act 2013 as a private or public limited company. It's important to remember that a business can only provide prepaid wallets if its Memorandum of Association's object clause permits it.

Cash withdrawals on non-bank-issued PPIs are allowed through all channels (agents, ATMs, PoS devices, etc.) up to a maximum of $2,000 per transaction within a monthly cap of $10,000 per PPI.

A digital wallet, often known as an e-wallet, is an online electronic device that allows for online transactions.

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