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Overview of Prepaid Wallet License

The RBI has shifted its focus on the use of cashless transfer of money since demonetisation for any monetary purpose. And so, it introduced the Prepaid Wallet License or Prepaid Payment Instruments (PPI) in India. Prepaid Wallets are financial instruments that help in the transfer of money in digital form. The License is obtained for complying with this Prepaid Payment Instrument or Prepaid Wallet System in India; one needs to obtain licenses from RBI. Such, a Prepaid Wallet License is issued under the Payment and Settlement System Regulations, 2008. And the main function of a Prepaid Wallet License is to permit its users to buy items or carry out transactions by using the digital platform.

This Prepaid Wallet License is a prepaid payment instrument that facilitates the purchase of goods and services, including fund transfer against the value stored on such instruments. Such stored value on such instruments represents the value paid for by cash, debit to a bank account, or credit card.

Pre-paid instruments are issued as:

  • Smart cards
  • Magnetic Stripe cards
  • Internet Wallets
  • Mobile Wallets
  • Internet accounts
  • Mobile accounts
  • Paper Vouchers
  • Any such instrument that can be used to access pre-paid amount (collectively called Prepaid Payment Instruments)

The RBI issues guidelines and rules from time to time for the use of the Prepaid Wallet License. The entities obtaining the license must adhere to these rules.

Minimum Requirements of Payment Wallet License

The minimum requirements for obtaining a Payment Wallet License are as follows:

  • Banks And NBFCs: 

Banks and NBFCs must have NOC from the Department of Payment Settlement and Systems of RBI. 

  • Minimum Capital Requirement:

The Minimum Capital Requirement should be obtained as follows:

  1. Net owned worth
  2. Preference shares
  3. Paid-up Equity Capital 
  4. Free Reserves
  5. Share premium account
  6. Deferred Revenue Expenditure
  7. Capital reserves representing surplus
  8. Book value of intangible assets
  • Non-Banking Entities:

Non-banking entities must register under the Companies Act, 2013 at the time of obtaining authorisation from RBI under PSS and must have a minimum net worth of Rs. 5 crores according to the latest audited balance sheet during submission of the application. With the end of the third Financial Year, the entity should achieve a minimum positive net worth of Rs. 15 crores, which must be maintained at all times. 

  • Details of Infrastructure: 

Complete details of the setup of IT Infrastructure for the operability of PPI must be furnished by the applicant.

  • Project Reports and Business Plan: 

The applicant provides a detailed Project report and Business Plan to RBI. The business plan must be realistic and should cover the aspects relating to the bank's access point in semi-urban or rural areas, customer grievance redressed mechanism and joint venture partnership with the Scheduled Commercial Bank. 

  • Net worth Certificate: 

All registered non-banking entities that have not audited financial statements need to obtain a Net Worth Certificate from CA. 

  • Object clause of MOA must allow a company to undertake the issuer's activities of PPI.
  • An authorised non-bank PPI issuer should submit a Net Worth Certificate every year in enclosed format to evidence compliance with the net-worth requirements according to the audited balance sheet within six months of completion of such financial year. 

An entity must achieve a net worth of at least Rs. 15 crores for financial positions as of 31st March 2023 if the entity gets the final authorisation on 1st March 2021. If the entity issues final authorisation on 1st May 2021, it must achieve a net worth of Rs. 15 crores for the financial status/position as of 31st March 2024. 

Benefits of Prepaid Wallet License

The introduction Prepaid Wallet License in the Indian Economy is a very advantageous step; some of its benefits are as follows:

  • Prepaid Wallet is intangible and can never be stolen or lost.
  • Payment in small denominations is also possible, as payment of Rs. 143.57 can also be made through online prepaid wallets.
  • Prepaid Wallets execute transactions instantly, unlike internet banking transactions.
  • No hidden or additional charges are associated with prepaid wallet transactions. 
  • No payment of service charge, activation fee, monthly charges, or annual charges.
  • Easy and quick way of crediting money in prepaid wallets. 
  • Auto-pay facilities in case of due payments, i.e., execute due payments automatically.
  • Prepaid wallets are protected with passwords; unlike a physical wallet, it is theft free.
  • No need to provide too many details while starting this online prepaid wallet system. 
  • Prepaid wallets also offer incentives and rewards on transactions or referrals. 
  • Enhanced the timely payments within due dates. 

Types of PPI for obtaining Payment Wallet License

The latest Master Direction of RBI was released in 2021 by amending Master Direction on Issuance and Operation of Prepaid Payment Instruments, 2017. This Master Direction has given the following different kinds of PPIs in India:

Small PPI

  • Cash Loadable Small PPIs

Under the 2021 new Master Circular of RBI, Small PPIs, i.e., both facility cash loading and no cash loading, are allowed to be issued by banks or non-banks after obtaining minimum information of the PPI holder. However, such PPIs are reloadable and are issued in electronic form. The issued instruments are used for the purchase of goods and services. The small PPIs are used in association with a group of identified merchants with specific contact with payment aggregator (payment gateway, for, e.g. Phone Pay, etc.). The amount loaded is limited to Rs. 10,000 for a given month and Rs. 1,20,000 for a financial year. Amount outstanding is limited to Rs. 10,000, and the total amount to be debited in a month is limited to Rs.10,000. Loading and reloading are done by cash or electronic means, and small PPIs are required to convert themselves into full KYC PPIs within a period of 24 months from the date of issue of Prepaid Payment Instruments.

  • Cash Non-Loadable Small PPIs

Small PPIs are not permitted to fund transfers or cash withdrawals. The amount to be loaded is limited to Rs. 10,000 in a given month, and to Rs. 1,20,000 in a financial year. And the outstanding amount is limited to Rs. 10,000. The total amount to be debited in a month is fixed at Rs. 10,000. Loading and re-loading is a form of total KFC PPI, bank account or credit card.

The Small PPIs with a cash loading facility can be converted into cash non-loadable Small PPI on with of any PPI holder.


Banks or non-banks issue these KYC PPIs after completing the detailed Know Your Customer (KYC). Such PPIs are for funds transfers or cash withdrawals. The limit of full KYC is increased to Rs 2 lakhs from 1 lakh. It is reloadable. There is no specific limit for credit and debit amounts during a month. There are facilities for cash withdrawal and funds transfer too under this category.

Specific Categories of PPIs

PPI is not issued by banks and non-banks apart from the following categories:

Gift PPIs

The value under Gift PPIs is limited to Rs. 10,000. These are not reloadable, and the fund transfer and cash withdrawal are prohibited under this category. The PPI issuer maintains KYC details, whereas a separate KYC is not required for customers using instruments like Debit Cards and Credit Cards.

PPIs for Mass Transit Systems (PPI-MTS)

MTS operators issue these PPIs only after obtaining authorisation from the concerned authority under the PSS Act. Automated Fare Collection is a significant feature of transit services, and these PPIs are used only at those outlets where operations are within premises. PPI issuer decides about customer details required for such PPIs. PPI-MTS issued is reloadable, and its maximum value for outstanding must not exceed a limit of Rs. 3,000 at any point in time. Funds transfers and cash withdrawals are prohibited under this PPI.

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Documents Required for Obtaining Prepaid Wallet License

The following documents are required for getting a Prepaid Wallet License:

  • Applicant's name
  • Address Proof of Registered Office
  • No Objection Certificate from RBI
  • Certificate of Incorporation
  • A detailed report of the principal business of the entity
  • Managerial Details
  • Detailed Business Plan and Project Reports
  • Sources of Funds
  • Proposed Capital Amount
  • An audited Balance sheet of the financial year
  • Name and Address of Bankers of the Company
  • Appointment of Statutory Auditor of the Company
  • Expected profits for Indian Financial System
  • Any other Information required by RBI

Process for Obtaining Prepaid Wallet License in India

The following are the process of obtaining a Prepaid Wallet License:

  • Application

Filing an Application under Regulation 3(2) of the Payment and Settlement System Regulations, 2008, with the sanctioned government fee and all relevant documents to the Reserve Bank of India to obtain the PPI License.

  • Screening 

The RBI initiates the Screening process to ensure the eligibility of applicants. RBI also applies checks and inter-alia on certain essential aspects like customer service efficiency, technical, safety, and security aspects for ascertaining the requirements for the application.

  • In-principal approval

After the RBI is satisfied with the application, it issues an 'in-principal approval' valid for six months from the approval date.

  • Audit Report

The applicant submits an Audit Report to RBI within six months. The applicant also submits the System Audit Report (SAR); otherwise, the automatic in-principal approval lapses. Applicant can also get an extension (single) of six months by making an advance appeal in writing with relevant reasons/excuses.

  • Grant of License

After considering all the particulars furnished by the applicant, the RBI issues the Prepaid Wallet License.

Validity Period of Prepaid Wallet License/PPIs

Prepaid Wallet Licenses issued have a minimum validity for a period of 1 year from the last loading/reloading date in PPIs. However, PPI issuers are free to issue PPIs with longer validity. Certificate of Payment Wallet License from RBI is valid for five years unless otherwise specified. However, it is also subject to review, including the cancellation by RBI. If PPIs are issued in the form of a card (with a validity period mentioned on the card), then the customers have the option to obtain a replacement of the card.

The outstanding balances of payment instruments are not terminated immediately at the instrument's expiration. The value can be depleted at 10% per month's outstanding value. The holders are also adequately cautioned in advance regarding the expiry of the validity of the payment instruments. The application for Renewal must be made three months from the expiration date.

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Corpbiz is an entity that cooperates to support all your legal and economic requirements being fulfilled by linking with you to experienced experts in the field. Clients seeking help from Corpbiz always receive a positive response to our provided legal services because of our focus on simplifying the legal necessities. We consistently provide our clients with an interactive and organised rundown as per requirements. 

If a client seeking assistance from Corpbiz has questions regarding the legal procedure for acquiring PPI Authorisation, Corpbiz representatives have a quick response rate. Corpbiz ensures that the client's communication with our experts is always positive and seamless.

Frequently Asked Questions

Prepaid payment instruments are methods that facilitate the purchase of goods and services against the value stored on such instruments. The value stored on such instruments represents the value paid for by the holder, by cash, by debit to a bank account, or by credit card.

A closed wallet is a mobile wallet or an e-Wallet which is designed for making full or part-payments for the services directly provided by the wallet issuer. Such wallet cannot be used for making payments to any third-party service providers or for money transfers.

Semi-closed wallets have a specific contract with the issuer to accept the payment instruments but do not permit cash withdrawal or redemption by the holder & which enables the procuring of goods & services which consist of financial services at a group of clearly recognised merchant locations/ establishments.

Two types of enterprises can start an e-wallet - Banks and Non-Banking Financial Companies (NBFCs). Hence, the first step toward creating an e-wallet is registering your company as an NBFC with the Reserve Bank of India (RBI).

Open System PPIs can be issued only by banks that have RBI approval to issue such PPIs. There is only one type of open system PPI, i.e., PPI upto ₹1,00,000/- after completing KYC of the PPI holder (KYC compliant PPI).

A wallet is a small software program used for online purchase transactions. Many payment solution companies, such as CyberCase, offer free Wallet software that allows several methods of payment to be defined within the wallet (for example, several different credit cards).

There are five types of digital storage available for your use: Online Wallet: Online wallets run on the cloud, so they can be accessed from multiple devices with an Internet connection. Online wallets are practical and convenient too.

Pre-paid Payment Instruments (PPIs) are defined in the RBI Guidelines issued under the Payment and Settlements Systems Act, 2005 as payment instruments that facilitate the purchase of goods and services, including funds transfer, against the value stored on such instruments. PPIs are one component of the Payment System.

PayPal is another cheap payment gateway. In addition, it is a secure payment platform, so you have to enter your bank details in each online store where you want to buy.

A digital wallet, also known as an "e-Wallet", means an electronic device or online service that allows an individual to make electronic transactions. It includes purchasing items on-line with a computer or using a smartphone to purchase something at a store.

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