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What is the Indian Payment Wallet Licence

In order to simplify and technologise the remittance process.Reserve Bank of India (RBI) has taken a number of measures to expedite payments, and thereforeIndia PaymentsThe wallet licence or prepaid wallet licence was born.

The forms of payment wallet licences in India include:

Debit or credit card Internet Wallet mobile account Paper Vouchers

These payment services operate under financial regulation and are carried out via mobile phones or cards or the Internet.RBI RBI is the licensing and issuing authority for payment wallet licences or prepaid payment licences.RBI is also responsible for issuing guidelines and rules for prepaid payment wallets. Payment wallet instruments are tools that facilitate the purchase of goods and services using stored value on such instruments. Prepaid instruments can be issued as magnetic stripe cards, smart cards, internet accounts, mobile accounts, mobile wallets and paper vouchers.

Note: A payment licence is commonly known as a payment licence.

Types of Payment Wallets in India

According to the Reserve Bank of India, Indian payment wallets are categorised as follows:

Closed System Payments: A closed system wallet is a wallet provided by a company to its customers that can only be used to make purchases on online platforms operated by the company. Examples: Myntra, Cleartrip, etc.

Pros:

Purchase of goods and services Get refunds and cash back

Limitations:

Withdrawal or exchange of cash from the wallet is not permitted.

It is closed, so the balance in the wallet can only be used to make purchases on the same platform.

Semi-closed payments: this type of wallet is used for the purchase of goods and services, it acts as a payment instrument and can be redeemed by a designated merchant who has concluded a special contract with the issuer to accept the payment instrument. Example:PaytmThe company is a member of the Mobikwik Group, Mobikwik, Freecharge and others.

Pros:

This can be used to purchase items from affiliated merchants. It can also be used to purchase from wallet issuers. Transfer of funds between wallet holders.

Limitations:

Cannot be used for ATM withdrawals.

Open system payments: covers all the limitations of closed and semi-closed systems. Can be used to purchase goods and services and also allows ATM withdrawals. Examples: Visa, MasterCard, Rupay, etc.

Pros:

Can be used to purchase goods by swiping the card. Used for withdrawals. Can be used for PoS machine payments. Available for online and mobile banking.

Registration procedure for prepaid wallets

An application was filed with the Registrar of Companies under the Companies Act, 2013 to incorporate the company. Filing of application in Form A under Regulation 3(2) of the Payment and Settlement Systems Regulations, 2008 and payment of the fee required for the grant of licence to the Reserve Bank of India. The Reserve Bank of India will conduct a basic screening process to ensure that the applicant meets the initial eligibility. Subject to fulfilment of the eligibility criteria and other conditions, the Reserve Bank of India will issue an "in-principle" approval. This approval will be valid for a period of six months from the date of approval. The company is required to submit a satisfactory system audit report to RBI within six months, failing which the 'in-principle' approval granted by RBI shall lapse and the company may apply in writing for an extension of six months with justifiable reasons. Final approval will be granted to the entity after considering all the details provided. The company shall commence business within six months of grant of certificate of authorisation.

Submit the documents required for the application:

Applicant status Certificate of registered office Certificate of Incorporation Detailed report of the company's principal activities Detailed information on the company's management Statutory Audit Report Latest audited balance sheet Name and address details of the company's banker Payment system details including processes, technology, security features and interoperability Benefits the company expects to bring to the Indian financial system Amount of capital proposed Source of funds Any other information required by RBI

Eligibility criteria for issuance of payment gateway wallet licences by the Government of India

Regular banks and NBFCs: Banks licensed by the Reserve Bank of India (RBI) to offer mobile banking transactions will be allowed to launch mobile-based prepaid payment instruments (mobile wallets and mobile accounts) Companies incorporated under the Companies Act: Companies incorporated under the Companies Act will be allowed to issue prepaid wallets only if they are licensed under the objects clause of the Memorandum of Association (MOA). Mobile Service Providers: Mobile Service Providers are permitted to issue mobile prepaid value. This value can be used to purchase airtime and is limited to the purchase of value-added digital content/services used in the mobile phone. The use of such prepaid value for the purchase of other goods or services is not permitted. Entities with FDI: These companies must have a minimum capitalisation that meets the FDI policy guidelines.

Capital requirements for qualifying entities

Banks and NBFCs: Entities meeting the capital adequacy requirements prescribed by the Reserve Bank of India will be allowed to issue advance notes. Such requirements have to be met from time to time. Companies: Financial entities registered under the Companies Act, 2013, whose primary objective is to seek payment of financial business authorised by the purse must have a net worth of at least Rs. 50 lakhs. FDI Entities : For entities governed by the Foreign Exchange Management Act (FEMA) and authorised to issue foreign exchange, prepaid notes are exempted from these guidelines. The use of payment instruments shall be restricted to current account transactions only and shall be subject to the provisions of the Foreign Exchange Management (Current Account Transactions) Rules, 2000, as amended from time to time.

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