How to Start a Prepaid Wallet License

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An Overview of Prepaid Wallet License

According to the Payment & Settlement Systems Act, 2007, those who want to start a Payment Wallet system in India must obtain the Certificate of Authorisation from RBI (Reserve Bank of India) and this authorisation is known as the Payment Wallet License. After Demonetisation, The RBI has emphasised on the use of cashless transfer of money for any financial purposes. Prepaid Wallets are such financial instruments which help in carrying or transferring money in the digital form. In India, the Reserve Bank of India is responsible for issuing license for Prepaid Wallets.

Many new & existing companies in India are constantly applying for Prepaid Wallet License because this license is a Prepaid Payment Instrument (PPI) that facilitates the purchase of products & services, including the transfer of funds against the value stored on such instruments.

In India, the prepaid instruments can be issued as:

  1. Mobile Wallets;
  2. Smart Cards;
  3. Magnetic Stripe Cards;
  4. Paper Vouchers;
  5. Any such instrument which can be used to access the pre-paid amount is known as PPI (Prepaid Payment Instruments).

What are the Types of PPIs in India?

  1. Old Classification of PPIs: The 2017 Regulations categorised PPIs into Closed System PPIs (used to facilitate the purchase of goods & services from that Company only), Semi-Closed PPIs (these are used for the purchase of goods & services, including financial services, remittance facilities, etc., at a group of clearly recognised merchant locations), and Open PPIs (issued by banks only and are used at any merchant). The PPI Regulations retain the classification of Closed System PPIs and simplify that the issuance of such instruments is not categorised as a payment system requiring authorisation by RBI, therefore, they are not regulated/supervised by the Reserve Bank of India. This clarity will be excepted by the industry as there existed different views on whether Closed System PPIs were needed to comply with the terms of the Regulations, 2017 even though they didn't require approval or authorisation. Therefore, any PPIs that are issued and redeemed by the same entity is not regulated or supervised by the RBI .
  2. Introduction of New Classification of PPIs:


Small PPI (with cash loading)

Small PPI (without cash loading)

Full KYC

Gift Cards

MTS or Mass Transit System


These PPIs are only for the purchase of products & services at a group of identified establishments or merchants.

It can be used for the purchase of products & services (across multiple merchants), funds transfers or cash withdrawal

Can be purchased by a person & redeemed by another person or individual with a group of identified establishments or merchants

It may be used at mass transit systems for fare collection & merchant outlets whose activities are carried on within the areas of the MTS.


Shall be converted into full KYC PPIs within 24 months from the issue date, failing which no further credits are permitted.

Not Allowed

Not Allowed

Not Allowed

Not Allowed

Cash withdrawal or Fund transfer

Not Allowed

Not Allowed

·         For bank-issued PPIs: Subject to the limit of Rs. 2000 per transaction; Overall monthly limit of Rs. 10,000 across all locations.

·         For Non-Bank Issued PPIs: Maximum of Rs. 2000/- per transaction within an overall monthly limit of Rs. 10,000/-

Not Allowed

Not Allowed

Monthly or Yearly Loading Limits

Monthly – Rs. 10,000

Yearly – Rs. 1,20,00

No separate limit – PPI issuer may decide

The maximum value shall not exceed Rs. 10,000/-

No specified limit – PPI issuer may decide

Outstanding amount limit

Shall not exceed Rs. 10,000/-

Shall exceed Rs. 2 lakhs

Not Allowed

Shall not exceed Rs. 3,000

Limits of funds transfer

Not Allowed

·         In the case of pre-registered beneficiaries, the funds' transfer limit shall not exceed rs. 2 lakhs per month per beneficiary.

·         For all other cases – Limit is Rs. 10,000/month.

Not Allowed

Not Allowed



Not mandatory - have the option to offer interoperability.

Exempt from providing interoperability.

Requirements for Issuance of Prepaid Wallet License

Following are some vital requirements for the issuance of Prepaid Wallet License in India:

  • Non-banks that comply with the criteria, including those stipulated by the regulatory department of RBI, shall be permitted to issue PPIs after obtaining a Payment Wallet License from RBI.;
  • Non-bank entities applying for the authorisation must be a registered company in India under the Companies Act, 2013;
  • Non-bank entities having Foreign Portfolio Investment (FPI) or Foreign Direct Investment (FDI) or Foreign Institutional Investment (FII) shall also fulfil the capital requirements as prescribed under the FDI policy guidelines of the Government of India;
  • 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;
  • In case the entity is issued final authorisation of Mar 01, 2021, then it shall achieve a minimum net worth of Rs. 15 crores for the financial position as of March 31, 2023. Similarly, if the entity got final authorisation on May 01, 2021, then it shall achieve a minimum net worth of Rs. 15 crores for the financial position as on Mar 31, 2024;
  • Authorised non-bank PPI issuers need to submit a net-worth certificate every year in the enclosed format to evidence compliance with the net-worth requirement as per the audited balance sheet of the F.Y. within 6 months of completion of that F.Y.;
  • Newly registered non-bank entities that may not have an audited statement of financial accounts must submit a certificate from their CA regarding the current net worth along with a provisional balance sheet.

Procedure for Prepaid Wallet License

Following is the procedure to get Prepaid Wallet License in India

Step 1: The first step is to file an Application in Form A for the approval or authorisation as per under Regulation 3(2) of the Payment & Settlement System Regulations, 2008, with the prescribed government fee & all the documents and details to the Reserve Bank of India to obtain the Prepaid Wallet License.

Step-2: The RBI shall conduct the Screening process to ensure prima facie eligibility of the applicants. The RBI also check the fit & proper status of the applicant. Application of entities not meeting the criteria or those that are incomplete or not in the prescribed form with all information shall be returned without refund of the application fees.

Step-3: In addition to the compliance with the guidelines, RBI shall also apply checks, inter-alia, on certain aspects like customer service & efficiency, technical and other related requirements, safety, and security aspects before granting in-principle approval to the applicants.

Step-5: The Company needs to submit a satisfactory Audit Report to RBI, within six months. The Company has to submit the System Audit Report (SAR); otherwise, the in-principal approval shall lapse automatically. The Company can receive a one-time extension for six months for submission of SAR by making a request in writing in advance with all the valid reasons. 

Step-6: After considering all the particulars furnished by entities, the Company will get Prepaid Wallet License. The Company has to commence business within six months from the grant of Prepaid Wallet License.

Validity of the Prepaid Wallet License

  • All PPIs issued in the country shall have a minimum validity period of 1 year from the date of last loading/reloading in the PPI. PPI issuers are free to issue PPIs with longer validity.
  • In case the PPI is issued in the form of a card (with the validity period mentioned on the card), then the customer shall have the option to seek a replacement of the card.
  • The outstanding balances in any payment instrument shall not be terminated immediately at the expiration of the instrument. The value may be depleted at the rate of 10% of the outstanding value per month. The holders may also be adequately cautioned in advance as regards the expiry of the validity of the payment instrument.
  • Certificate of Prepaid Wallet License shall be valid for 5 years, unless otherwise specified. However, it shall be subject to review, including the cancellation of the Certificate of Prepaid Wallet License.


The Regulations, 2017 had mandated that interoperability (the ability to use one payment system with another) would be implemented in phases & that operational guidelines on interoperability would be issued. A circular from RBI issued in May 2021 subsequently mandated that KYC compliant PPIs were to ensure interoperability, while PPIs for MTS and Gift Cards are exempted, and this involves interoperability of PPIs issued through card & wallets networks, PPIs issued through card networks and PPIs issued through UP.

Safeguards against Money Laundering

The Department of Banking Regulation (DBR), working under the Reserve Bank of India, has issued some guidelines in their 'Master Direction- KYC (Know Your Customer)' to combat the issue of money laundering. These guidelines include AML (Anti-Money Laundering), KYC (Know Your Customer), and CFT (Combating Financing of Terrorism), and are applicable to all the entities and their agents involved in issuing Prepaid Payment Instruments.

Prevention of Frauds and Security Standards

The PPI issuers need a secure and effective risk management system to mitigate any chances of fraud and ensure end-to-end customer protection. Further, the PPI issuers need to put not only the precise information but also the data security mechanisms and techniques for the prevention and detection of frauds.

The framework that the PPI issuers need to follow to address the safety and security concerns includes:

  • In prepaid wallets, if the PPI issuers provide the same login credentials for both PPI and other services offered, then they need to inform the same to the customer through SMS or post or email. Moreover, they need to provide the option to logout from the mobile account on a prompt basis;
  • PPI Issuers must use appropriate systems to prohibit multiple invalid attempts to access/ login into the PPI. Such methods include the feature of inactivity or timeout;
  • All the PPI Issuers must introduce a system where every succeeding payment transaction in the wallet is validated by customer consent;
  • Any card, whether physical or virtual, issued by the PPI issuers must mandatorily have AFA (Additional Factor of Authentication) as needed for debit cards. However, it will not be required in the case of PPIs issued under PPI-MTS;
  • The PPI Issuers must provide customer induced options for setting a cap on transaction value for different transactions and the number of transactions. However, the customers must be allowed to change the caps with additional validation and authentication;
  • Issuers must fix a limit on the number of beneficiaries that may be put in a day per PPI;
  • Issuers need to introduce a mechanism of alert when a beneficiary is added;
  • PPI Issuers must put a system to send alerts when transactions are complete using the Prepaid Payment Instruments. The alerts must also intimate about the credit or debit available/ remaining balance in the wallet after completion of the said transaction;
  • Issuers must set up a mechanism to check on the number of operations carried out in a PPI per day/ per beneficiary;
  • Issuers must also use an appropriate device to detect, prevent, and restrict the occurrence of fraudulent transactions together with loading or reloading funds into the prepaid wallet;
  • Issuers must set up a suitable internal and external escalation system in case of suspicious actions, apart from alerting the customer in case of such transactions.

Consumer Protection and Grievance Redressal Framework

In India, all issuers of prepaid payment instruments need to disclose the following important terms and conditions in a simple and clear language:

  • All charges for the use of the prepaid wallet instruments;
  • The period of expiration and the terms and conditions associated with the expiry of the prepaid instrument;
  • The customer care phone number and the website URL for ensuring customer service.

The PPI issuers must set up a formal, publicly disclosed customer grievance redressal framework, along with designating a Nodal Officer to manage the customer grievances or complaints, the escalation matrix, and turnaround time for complaint resolution. The complaint registering provision, if made available on mobile/ website, must be easily accessible by the customer. The things to be included in the framework can be summarised as:

  • The PPI issuers must circulate the information of their consumer protection and grievance redressal framework in simple language (preferably in Hindi, English, and the local language);
  • Issuers of prepaid payment instruments must specify the contact details of customer care, including further information of Nodal Officials for Customer's Grievance Redressal (email address, postal address, telephone numbers, etc.) on mobile wallet apps, website, and cards;
  • PPI agents must display the proper signage of the issuer of the prepaid instrument and the contact details of the customers;
  • PPI issuers must provide specific complaint numbers for lodging/ registering the complaints and the service to track the status of the complaint lodged by the customer;
  • Issuers of prepaid wallet must initiate action to resolve any customer grievance or complaint expeditiously, preferably within 48 hours. Further, these issuers need to address the complaint within 30 days from the date of receipt of such grievance or complaint;
  • PPI Issuers must also display the detailed list of their designated or authorised (name, address, contact details, agent ID, etc.) both on the website and mobile application;

PPI issuers must create the necessary awareness and educate customers about the secure and safe use of the PPIs, along with the need to keep passwords confidential, the process to be followed in case of theft or loss of card or authentication data, or if any abuse/ fraud is detected, etc.

Transactions across Borders

The individuals or entities authorised under the Foreign Exchange Management Act, 1999 to issue the Foreign Exchange denominated PPIs (Prepaid Payment Instruments) do not require to abide by the provisions of PPI guidelines as per RBI notification. Further, the transaction limit on the cross-border dealings for these entities is set for a maximum of Rs 5000.

FAQs of Prepaid Wallet License

The different forms in which PPIs can be issued are Wallets, Cards, or any such form that may be used to access the PPI and for using the amount therein.

No, PPIs cannot be issued in the form of paper.

Yes, it is possible to issue PPI either on a solo basis or on a co-branded basis with another entity, as per its choice.

The co-branding partner for PPI issue should necessarily be a company that has been incorporated in India under the Companies Act, 1956 or the Companies Act, 2013.

Yes, both banks and non bank PPI issuers, such as the Indian agent of an authorized overseas principal are eligible to issue PPIs for beneficiaries of “inward remittance” under the “money transfer service scheme of the RBI.

The transaction limit for the cross border inward transactions is Rs 50000.

The key features of “Minimum Detail PPI” are, it is possible to reload it, amount loaded cannot exceed Rs 10000 in a month and Rs 1 lakh in a year, the outstanding amount cannot exceed Rs 10000, can be used for purchasing goods and service only.

The holder of the minimum detail PPI always has the option of closing the said PPI at any time and transferring the balance in it to his/ her bank account, subject to compliance with the KYC requirements.

The term disclosure includes the fee and the charges that are associated with the use of PPI, the period of expiry, and the terms and conditions of the expiration of the instrument.

The issuers of PPI are required to provide the option of generating or receiving the account statements for a period of at least six months, to the PPI holder.

The term “Prepaid Payment Instruments” denotes the methods that facilitate the purchase of services and goods against the price fixed on such instruments.

The term “Closed Wallet” means an e-Wallet or a Mobile Wallet that is designed for making full or part-payment for the services directly offered by the wallet issuer.

The first and the foremost step in the process of starting an e-wallet business in India is to incorporate a company as an NBFC with the Apex Bank (RBI).

A bank who has approval from the Apex Bank can issue Open System PPIs. Further, one can obtain PPI License only after completing KYC of the PPI Holder.

The term “Payment Wallet” means a small software program that is used for the transactions concerning the online purchase.

In total, there are 5 different types of e-wallets available in India.

The term PPI License denotes a license given to the instruments that facilitate the purchase of services and goods, funds transfer, etc.

The term “M Wallet” denotes a Mobile Wallet that stores payment card details and information available on a mobile device.

PayPal is the cheapest payment gateway available in India.

The documents are name and constitution of the applicant, address proof of the registered office, certificate of incorporation, details about the company’s main business, management information, audited balance sheet, name and address of the company, etc.

Digital Wallet or E-wallet means an online electronic device that facilitates electronic transactions.

The RBI or Reserve Bank of India has the Authority to issue Payment Wallet License in India.

Payment Banks are classified into 4 categories, such as closed system wallets, Semi-closed system wallets, Open system Wallets, and Semi-Open Wallets.

Rs 50000 acts as the maximum loading limit for the Prepaid Wallets in India.

Yes, co-branding partnership is possible, only if the same is done in compliance with the provisions of the Companies Act 2013.

There are two types of Semi-closed PPI available in India, which are Maximum Rs 10000 if the “minimum detail of the PPI holder” is available and maximum of Rs 100000 if the “KYC of the PPI holder” is available.

One can achieve a re-load limit up to Rs 10000 and can purchase goods and service up to Rs 10000 per month.

Yes, it is mandatory to obtain RBI Clearance to acquire Payment Wallet License in India.

The money collected is used by the entities to make payments to the merchants who are part of the “acceptance arrangement”, for “facilitating funds transfer” and for “remittance services” on behalf of the PPI holders.

The list of all the approved PPI Issuers is available on the official RBI portal.

The different types of PPIs are Closed System PPI, Semi-closed system PPI, and Open System PPI.

The process in which a PPI Issuer is responsible for verifying and cross checking that the bank account relates to the PPI holder is known as Duly Verified by the Issuer.

The key features of a semi closed full KYC PPI are Reloadable in Nature, Outstanding Amount shall not exceed Rs 1 lakh, No upper limit provided for the Total Credits and Debits in a month, Purchases of Goods and Service, and Funds Transfer.

The key features of a Gift PPI are Maximum Value is Rs 10000, Not of Reloadable Nature, Not Permitted to Cash-out or Refund, and can be revalidated.

A Prepaid Meal Instrument can only be issued as Semi-closed PPIs that too without Cash Withdrawal or Funds Transfer.

No interest is payable on PPI balance.

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