As
the concept of Prepaid Payment Instruments are becoming popular in
our country, RBI to further encourage Safe ePayments has considered
it necessary to announce two amendments.
The
following are two amendments announced on 12/06/2012
- The limit of Rs 1000/- for semi-closed prepaid payment Instrument that can be issued under Para 6.4 (i) of guidelines dated April 27, 2009 has been raised to Rs 2000/-.
The
instruments can be issued against any identity document furnished by
the customer as long as the issuer reports the annual
transfer/suspicious transactions. Further, RBI has also specified
that only one active instrument should be issued by the issuer to the
same holder I.e multiple instruments should not be issued.
Another
important amendment is on the belief that the full KYC of the
customer has been done by the provider of such services.
- The issue of semi-closed prepaid payment instrument upto Rs 10,000 without separate KYC being conducted by the issuer, for payment of utility bills/ essential services/ air and train travel under Para 6.4 (iii) was permitted on the premise that full KYC of the customer is already being done by the provider of such services. The control exercised by the issuer has been on the acceptance side, ie. utility of the card for the specific purpose at the specific merchant. Based on this rationale, it has been decided to redefine the merchant categories under Para 6.4 (iii).
The
Merchant categories now included under Para 6.4(iii) are :-
a)
Utility providers/Essential service providers viz electricity bills,
water bills, telephone/mobile phone bills, insurance premium, cooking
gas payments, rental for Internet/Broadband Connections, Cable/DTH
subscriptions and Citizen Services by Government or Government
bodies. .
b)
Air and Train travel tickets
c)
recurring payment of college fees
d)
recurring payment of school fees
e)
government taxes upto a limit of Rs10,000/-
The
concept of Prepaid instruments in India was first thought of in the
paragraph
151 of ‘Annual Policy Statement for 2009 – 2010’
Semi-closed
system payment instruments are redeemable at a group of clearly
identified merchant locations or establishments which contract
specifically with the issuer to accept the payment instrument. No
cash withdrawals are permitted under the semi-closed payments
instrument options.
A
Payment
Instrument
in brief can said to be instruments which permit transactions for
value between a payer and beneficiary by which the payer discharges
the payment obligation of the beneficiary. The payment mode can be
pre-paid, post-paid(eg mobile connections) or immediate discharge.
A
simple defintion of Pre-Paid Instrument is any payment instrument
which permit transactions for value stored in them. The most popular
prepaid instruments in India are the prepaid mobile vouchers. As the
prepaid mobile vouches gained popularity, the concept was extended to
other services.
Prepaid
instruments aim to reduce the usage of cash and also enable ePayments
through internet/mobile shopping.
Popular
types of Prepaid payment instruments.
1)
Closed System Payment Instruments: These are payment instruments
generally issued by business establishments for use at their
respective establishment only. These instruments do not permit cash
withdrawal or redemption. The best example could be canteen tokens
issued by business establishments.
2.
Open System Payment Instruments: These are payment instruments which
can be used
for
purchase of goods and services and also permit cash withdrawal at
ATMs; The best example is the Bank Debit Card.
3.
Semi‐closed System Payment Instruments: These are payment
instruments which are
redeemable
at a group of clearly identified merchant locations/ establishments
which contract specifically with the issuer to accept the payment
instrument. These instruments do not permit cash withdrawal or
redemption by the holder; The best example are the mobile recharge
vouchers.
4.
Semi‐open System Payment Instruments: These are payment instruments
which can be
used
for purchase of goods and services at any card accepting merchant
locations (Point
of
sale terminals). These instruments do not permit cash withdrawal or
redemption by
the
holder.
Normally, cross border
transactions are not permissible on these instruments. However, only
entities which have permissions under FEMA can issue cross border
transaction enabled prepaid instruments.
In
India, of the above 4, RBI has permitted the issuance of the
following three types of instruments:
(i)
Closed system payment instruments Examples of such instruments are
gift vouchers issued by certain merchant establishments and telephone
calling cards. Mobile prepaid value may also be considered as a
closed‐system prepaid payment instrument, though they can be used
for availing of additional value‐added services.
(ii)
Semi‐closed system payment instruments. E.g. prepaid cards which
are redeemable at a group of establishments associated with a
particular shopping mall, tourist resorts, or at establishments and
service providers listed out by the issuer; and
(iii)
Open system payment instruments ‐ only banks are permitted to issue
this type of
instruments.
Previous
Circulars on Pre-Paid Instruments:
