RBI allows prepaid wallets, cards without KYC, to pay for rail, metro, bus, toll, parking; how it works

The Reserve Bank of India (RBI) announced that it will now allow licenced bank and non-bank Prepaid Payment Instrument (PPI) issuers to issue PPIs for payments across different public transport networks without KYC.

Metro, bus, train, waterways, tolls, and parking services can now be paid digitally through prepaid wallets and cards, thanks to RBI’s approval of PPI issuing without KYC.

According to the RBI press release dated February 23, 2024, “ Public transport systems across the country cater to a multitude of commuters on a daily basis. To provide convenience, speed, affordability, and safety of digital modes of payment to commuters for transit services, it has been decided to permit authorised bank and non-bank PPI issuers to issue PPIs for making payments across various public transport systems.”

Prepaid Payment Instruments: RBI allows prepaid wallets, cards without KYC for mass transit system

All you need to know about PPIs for Mass Transit Systems (PPI-MTS)
a.Banks / non-banks are permitted to issue such PPIs;
b.Such PPIs shall contain the Automated Fare Collection application related to transit services, toll collection and parking;
c.Such PPIs shall be enabled only for payments across various modes of public transport such as metro, buses, rail, & waterways, tolls and parking;
d.These PPIs can be issued without KYC verification of the holders;
e.These PPI can be reloadable in nature;
f.The amount outstanding, in such PPIs shall not exceed Rs.3,000 at any point of time;
g.These PPIs can have perpetual validity, i.e., the provisions of validity and redemption given in Section 13 of this MD shall not apply to PPI-MTS; and
h. Cash withdrawal, refund, or funds transfer shall not be permitted in such PPIs.

Important FAQs on PPI according to the RBI website.
What are PPIs?
Ans. PPIs are instruments that facilitate the purchase of goods and services, conduct of financial services, enable remittance facilities, etc., against the value stored therein.

Who are the issuers of PPIs?
Ans. PPIs can be issued by banks and non-banks. Banks can issue PPIs after obtaining approval from RBI. The non-bank PPI issuers are companies incorporated in India and registered under the Companies Act, 1956 / 2013. They can operate a payment system for issuing PPIs to individuals / organisations after receiving authorisation from RBI.

Who is a holder of a PPI?
Ans. A holder of a PPI is an individual who obtains / purchases the PPI from the PPI issuer. However, in the case of a gift PPI, any other intended/targeted beneficiary, though not the purchaser, can also be a holder.

What are the various types of PPIs?
Ans. PPIs that require RBI approval / authorisation prior to issuance are classified under two types:
a. Small PPIs (or minimum-detail PPIs): These PPIs are issued by banks and non-banks after obtaining minimum details of the PPI holder. These PPIs can be used for the purchase of goods and services at a group of clearly identified merchant locations / establishments that have a specific contract with the issuer (or contract through a payment aggregator/payment gateway) to accept the PPIs as payment instruments. Funds transfer or cash withdrawal from such PPIs is not permitted.
b. Full-KYC PPIs: The PPIs are issued by banks and non-banks after completing the Know Your Customer (KYC) of the PPI holder. These PPIs can be used for the purchase of goods and services, funds transfer, or cash withdrawal.

What are the types of small PPIs?
Ans. Small PPIs can be of two types:
a. PPIs up to Rs 10,000/- (with cash loading facility). These PPIs shall be converted into full-KYC PPIs within 24 months.
b. PPIs up to Rs 10,000/- (with no cash loading facility).