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An Overview of Mobile Wallet License

Digitization of payment transactions is taking India's growth to the next level. Payments via digital wallets have become a new normal in people's lifestyles. These transactions have the oversight of regulators to avert any possibility of fraud. The future of mobile wallets is bright and if any business wants to get started with this venture, it has to secure a mobile wallet license, broadly known as Prepaid Wallet License, from the RBI. It is a non-negotiable condition as per the Payment and Settlement Systems Act, 2007. As per RBI, the Mobile Wallet License falls under Prepaid Payment Instruments (PPIs).

What is a Prepaid Payment Instrument (PPI)?

Prepaid Payment Instruments (PPI) allow for the purchase of goods and services, financial services, remittance facilities, etc, against the amount stored therein. To better understand what a Prepaid payment instrument is, think of it as a virtual bank from where you can conduct any transaction against the stored fund, which can be added from different sources, including bank, cash, credit card, debit card, and so on. To get started with this venture, one must apply for Mobile Wallet License in India. Reserve Bank of India holds the right to grant this license. The mobile wallet business is a PPI, which can exist in the following forms:

  • Credit Card
  • Debit Card
  • Smart Cards
  • Paper Vouchers
  • Magnetic Strip Cards
  • Mobile accounts

Understanding the types of PPI/Mobile Wallet licenses

RBI has classified PPI wallets into the following categories:

  1. Closed wallets: Closed wallets are largely found in the e-commerce space, where online stores provide exclusive virtual wallets to customers for making a store-based purchase.
  2. Semi-closed wallet: As the name suggests, these types of wallets remain functional within a specific group.
  3. Semi-Open Wallet: Semi-Open Wallet allows its holders to make a purchase at stores that accept digital cards.
  4. Open Wallet: The open wallet has a broad application as it allows its holder to make a purchase anywhere
  5. Cross-border transaction: Online cross-border transaction is also possible nowadays- thanks to upgraded RBI guidelines.

Benefits of a Mobile Wallet License

The following are the reasons to adopt an RBI PPI license or a Prepaid Payment wallet for conducting digital transactions:

  • Since a prepaid wallet is a digitized form of wallet, its possibility of being stolen or lost is almost unpragmatic.
  • Through these wallets, payment in small denominations can be executed without an issue.
  • Payment through a mobile wallet happens almost instantly. This is unlike internet banking, where transactions are reflected in the account after 12 hours.
  • Most prepaid wallets are free from hidden or periodic charges like internal banking.
  • Most prepaid wallets ensure referring rewards for the users.
  • Mobile wallets are remarkably fast when it comes to adding funds via debit cards or net banking.
  • The users of payment wallets can automate loan or credit repayments.

Who can apply for Mobile Wallet License in India?

Listed below is the eligibility requirement for securing Mobile Wallet License in India:

  1. For banks and Non-banking financial institutions:
    • The requirement for minimum capital is nil.
    • Reserve bank approval is a must.
  2. For Non-NBFC
    • The minimum net worth is Rs 5 crores
  3. FEMA-certified companies
    • No minimum capital requirement
    • PPIs accessibility is limited

Necessary Papers required for Mobile Wallet License in India

  • Applicant’s ID proof
  • Registered office’s address proof
  • Certificate of incorporation (COI)
  • Memorandum of Association (MoA)
  • A necessary paper highlighting management structure in detail
  • Details concerning statutory auditors
  • Audited balance sheet
  • Designated banker's name and address that deals with the company’s transactions.

Process to Secure Mobile Wallet License in India

Following is the detailed process of securing a Mobile Wallet License from the Reserve Bank of India:

  • Legalize your entity under the Companies Act 2013
  • Fetch the FORM A from the Reserve Bank Portal.
  • Duly fill out the application with the mandatory details
  • Attest the application with the mandatory necessary papers and submit it to RBI.
  • The inspection process will come into effect followed by the grant of approval called “In principle”
  • Next, the applicant must share the satisfactory audit with the RBI
  • The final inspection will come into effect in which RBI vets the audit report and other vital necessary papers for any legal error.
  • The successful vetting will lead to the grant of Prepaid Wallet Approval.

Validity of the Mobile Wallet License

RBI grants the Prepaid wallet license with a minimum validity of 1 year, which comes into effect from the date of last loading/reloading.

  • The validity extension is possible for PPIs.
  • The authorization certificate accorded by the Reserve Bank stays valid for 5 years. However, the certificate remains open for inspection and even cancellation.
  • Customers using a valid card offered by a PPI can also apply for the replacement of the same.
  • The outstanding amount in a payment instrument must stay intact at around 10 percent of the outstanding value per month.
  • The balance in the instrument should remain intact for a couple of days from the date on which the instrument becomes non-operational.
  • The license holders should timely intimate the authority about the expiration of the PPI service.

Rules to be followed by PPI issuers in view of Money Laundering

RBI has penned down some rules around money laundering for the issuers of PPIs. These norms are formulated by the Department of Regulation (DoR) functioning under the RBI. Let’s have a glance over these guidelines:

  • The PPI issuer should operate in line with the norms of the Money Laundering Act, 2002
  • Every PPI issuer is liable for keeping the tab on each transaction and maintaining the necessary paperary evidence of the same. RBI can vet these necessary papers anytime.
  • If case any suspicious transaction takes place, the issuer must share the concern with the Financial Intelligence Unit-India (FIU-IND) by filing Suspicious Transaction Reports (STRs).

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Norms around the Issuance of PPIs

All entities having the right to issue Mobile payment wallets can grant reloadable or non-reloadable PPIs.

  • Every PPI issuer must release clear-cut guidelines with the BOD’s approval for the systematic issuance of various PPIs.
  • Brand visibility for every PPI must be visible in all instances that accommodate attention.
  • Every PPI issuer must share the detail of newly incorporated brand name(s) falling under the PPI service with RBI.
  • PPI issuers are liable not to pay interest on PPI-related balances.

What is the concept of Loading and Reloading PPIs?

Every PPI should have the authorization to be loaded/reloaded by cash in INR, debit by a bank account, debit and credit cards, and regulated payment instruments.

  • Cash loading cannot go over Rs.50,000/- per month, subject to the overall PPI limit.
  • PPI can exist on the card, wallets, etc., that are PPI-compatible.
  • Paper voucher-based PPIs are inaccessible to PPI license holders in India.
  • Banks must undertake the loading/reloading of PPIs as per RBI’s norms.

Norms the hiring and tracking of Authorized Agent for banks

Banks and non-banks must have the power to load/reload PPIs via approved agents subject to the given guidelines:

  • Banks must have BOD-approved guidelines for engaging agents.
  • Banks should perform in-depth scrutiny of a person appointed as an agent.
  • Banks should have the power to approve, reject, or terminate the agent.
  • Banks must ensure the utmost perseverance and confidentiality of their customer's and agents’ records.
  • Banks must constantly keep tabs on agents’ activities and accordingly review performance reports once a year.
  • Banks must use funds for RBI-approved operations only.

Let Corpbiz’s Experts deal with the Mobile Wallet License process

Corpbiz has been a spearhead in licensing regime since 2013. With almost a decade old experience and the trust of thousands of satisfied clients pan India, we are now poised as a leader in what we do. We are well-versed in PPI licensing complexities, endless norms, and complicated paperwork. Our unprecedented quality of rendering different government permits and license in one go make us a one-of-a-kind service provider. Let us know what you need, we will never disappoint you.

Frequently Asked Questions

A PPI license refers to a legal RBI-backed authorization that enables a firm to render PPIs service in India

Although a PPI license comes with a one-year validity. However, this timeline can be increased by as long as 5 years by RBI.

Applicant ID proof, Charter necessary papers, audited balance sheet, banker's name, etc.

Different Mobile Wallet instruments that are operational in India includes closed wallets, Semi-closed wallet, Semi-open wallet, Open-wallet, etc.

The name of the application is - FORM A.

Such entities must have a minimum net worth of Rs 5 crore

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