Skip to main content
TAXAJ Corporate Services LLP - Financial Doctors

Payments Wallet License

Closed, Semi-Closed & Open Loop Prepaid Card & Voucher

To ease money transfers and make it tech-savvy the Reserve Bank of India (“RBI”) has taken many steps to make payments fast, hence the onset of payment wallet license or prepaid wallet license. The different forms of payment wallet license are:

  • Debit card or credit card
  • Internet wallets
  • Mobile accounts
  • Paper vouchers

These payment services are operated under financial regulation and performed via mobile or cards or the internet. The regularity and issuing authority for issuing the Payment wallet license or a prepaid payment license is RBI. RBI is also responsible for issuing guidelines and rules for prepaid payment wallets. Payment wallet instruments are instruments that facilitate the purchase of goods and services against the stored value on such instruments. The prepaid instruments can be issued as magnetic stripe cards, smart cards, internet accounts, mobile accounts, mobile wallets and paper vouchers.

Page 1Created with Sketch.

About This Plan

Get your payments wallet license registered in the fastest possible manner.

Created by potrace 1.15, written by Peter Selinger 2001-2017


It usually takes 25 to 35 working days, depending upon government approval.

Services Covered
Who Should Buy
How It's Done
Documents Required
Services Covered

👉 Incorporation of a Private/Public Limited Company. Click Here

👉 Filing of application to RBI: Filing of application to Chief General Manager of the RBI (Reserve Bank of India)

👉 Evaluation of Application: EAC (External Advisory Committee) must assess the application & call for information and inquiries with the applicant.

👉 Granting License: RBI license must be given who satisfies all the eligibility criteria for payment bank licenses.

👉 Online Review of license: The name of applicants for bank licenses must be displayed in the official RBI site.

👉 RBI Approvals : In-principle approval to issue prepaid cards shall be taken up by RBI for 6 months after which RBI shall extend the approval and issue final license.

Who Should Buy

  • Businesses looking to expand or scale operations on higher level
  • Startups looking to raise capital and issue ESOPs
  • Businesses aiming to work globally or with reputed clients
How It's Done

  1. DSC Application

  2. Name approval form filing

  3. Preparation of Incorporation Documents

  4. Getting those docs signed by the respective stakeholders

  5. Filing of e-Forms with ROC

  6. Receipt of Incorporation Certificate with PAN, TAN, GST, EPF, ESI & Bank Account.

Documents Required

  • Applicant status
  • Proof of registered office
  • Certificate of Incorporation
  • A detailed report of the principle business of the company
  • Detailed information about the management of the company
  • Statutory audit report
  • Recent audited balance sheet
  • Name and address details of bankers of the company
  • Payment system details with process flow, technology, security features and interoperability
  • Benefits expected to the Indian Financial system from the company
  • Capital amount proposed
  • Sources of funds
  • Any other information required by RBI

How to get Payment Wallet, Payment Bank, Prepaid Wallet License in India | Open and Closed Loop Card

Types of Payment Wallets in India

The payment wallets in India are classified as follows as per RBI:

Closed System Payment: The closed system wallet is a wallet that is offered by the company to its customers which can be used only for purchasing on the online platform that the company operates on. The close system is a system where the PPI that is issued is only valid when used against purchases from the entity which issued it in the first place. The use of such a PPI will be invalid when a person tries to purchase items or services from a different provider. This system also does not allow cash withdrawal against the amount that is stored in the PPI. Since this system of PPI is not classified as a payment system by the RBI, the issuance of such PPIs does not require the prior approval of the RBI. Examples of a closed system PPI are paper vouchers or gift vouchers and coupons; it also will include smart cards that can only be used in the establishments that issue them such as metro railcards and chips. Example: Myntra, Cleartrip, etc.


  • Purchasing goods and services
  • Receive refund and cashback


  • No cash withdrawal or redemption is allowed from the wallet.
  • It is closed, and hence the balance in the wallet can only be used for purchasing on the same platform.

Semi-Closed Payment: This wallet is used to buy goods and services, and it acts as a payment instrument that is redeemable by an identified merchant that contracts specifically with the issuer to accept the payment instrument. Unlike PPIs issued under the closed system, PPIs issued under the semi-closed system can be used in multiple establishments but not all. PPIs under this system can only be issued by banking institutions approved by the RBI or non-banking institutions authorised by the RBI. PPIs cannot be issued without the prior approval or authorization from the RBI. They can be used for purchases or remittance facilities etc. in a group of clearly identified merchants either by location or by individual establishments who have specific contracts with the issuer of the PPIs to accept PPIs as payment.

Such a contract can be through a payment aggregator or a payment gateway and does not need to be directly between the issuer and the establishment accepting the PPI as a payment option. Similar to PPIs issued under the closed system PPIs issued under the semi-closed system also are not allowed to facilitate cash withdrawal. This is irrespective of whether the PPI is issued by a bank or not. Example: Paytm, Mobikwik, Freecharge, etc.


  • This can be used to buy goods from affiliated merchants.
  • It can also be used for purchasing from the wallet issuer.
  • Transfer of money among holders of wallets.


  • This cannot be used for withdrawing money from ATMs.

Open System Payment: This covers all the limitations of the Closed and semi-closed system. This can be used for the purchase of goods and services and also permit cash withdrawal at an ATM. PPIs under this system can only be issued by banking institutions that have been approved by the RBI. These instruments can be used to facilitate purchases, remittances, cash withdrawals, etc. examples of PPIs issued under this system are debit cards and credit cards. Example: Visa Card, Master Card, Rupay Card, etc.


  • Can be used for the purchase of goods by swiping cards.
  • For cash withdrawal.
  • It can be used at the PoS machine for making payments.
  • It can be used for internet and mobile banking.

Types of Semi-Closed PPIs

There are three types of semi-closed PPIs. Depending on the type of the PPI, only a certain amount of money can be loaded onto the instrument. They are as follows:

1. Minimum detail PPI: this type of PPI means that only the bare minimum details of the holder of the PPI are obtained. Such as only the name and the number on the holder and no other details such as address, pan number, Aadhar number, or bank account details etc. have not been obtained by the PPI issuer. In such a case, the maximum amount of money that may be loaded on the PPI is up to Rs 10,000.

2. Loading only from a bank account: In the case where the PPI can only be loaded via the bank account and not through any other means such as cash etc. the maximum amount of money that can be loaded onto the PPI is Rs 10,000.

3. Full KYC PPI: where the full KYC of the PPI holder has been obtained and registered by the PPI issuer the maximum limit of money that can be loaded onto the instrument increases to Rs 1 lakh.

Who Can Issue Prepaid Payments Instruments?

    • With regards to non-banking entities such as companies, the requirements to be met by them to be eligible to issue PPIs are as follows- – The company must be incorporated in India. – The minimum paid-up capital of the company must be more than Rs 5 crore. – Minimum positive net worth must be Rs 1 crore at all times.
    • When it comes to banking institutions, all banks which comply with the eligibility criteria established by the RBI are allowed to issue PPIs. But when it comes to providing Mobile Banking Transactions, only banks that have been approved by the RBI may launch mobile-based PPIs.
    • In the case of Non-Banking Financial Institutions and entities, they are only allowed to issue PPIs under the semi-closed or the closed system. This includes mobile-based PPIs. The only condition to the issuance of PPIs by non-banking entities is that they are required to maintain an escrow account with any scheduled commercial banks in the country.

Customer Protection

The RBI, for the purpose of protecting the holders and acceptors of PPI, are protected from exploitation and fraud, require the issuer of the PPI to state all the terms and conditions that are entailed in the usage of the PPI in simple and clear language.

This declaration by the issuer of the PPI has to give special attention to bring to the notice of the customer the following terms.

  • All fees and charges against the usage of the PPI.
  • The direct contact information to customer services, such as the phone number, email address and website URL.
  • The validity period of the instrument and the terms and conditions of expiry of the instruments.
  • The terms of depreciation of the value of the instrument if any after the period of validity is over.

Procedure For Incorporation Of Prepaid Wallet

Step 1 – Formation of the company under the Companies Act, 2013 by applying to the Registrar of Companies.
Step 2 – File application for approval in Form A as per Regulation 3(2) of the Payment and Settlement Systems Regulations, 2008 along with the requisite fees to the Reserve Bank of India for grant of license.
Step 3 – The basic screening process will take place by the RBI to ensure the prima facie eligibility of the applicant.
Step 4 – Subject to the fulfillment of the eligibility criteria and other conditions the Reserve Bank of India issues an ‘in-principle’ approval. The validity of this approval will be 6 months from the date of granting of the approval.
Step 5 – The company must submit a satisfactory system audit report to RBI within six months failing which the ‘in-principle’ approval granted by the RBI will lapse, and the company can appeal for an extension of six months in advance in writing, specifying the valid reasons.
Step 6 – Post consideration of all particulars furnished, the entities are granted final approval. The company shall commence business within six months from the grant of Certificate of Authorization.

Eligibility Criteria For Issuing Payment Gateway Wallet License

    • Scheduled Banks and Non-Banking Financial Institution: Banks that have permission from RBI to provide Mobile Banking Transactions shall be permitted to launch mobile based prepaid payment instruments (mobile wallets & mobile accounts)
    • Companies incorporated under Companies Act: A company incorporated under the Companies Act can issue a prepaid wallet only if it is permitted as per the object 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 for purchasing talk time and will be restricted only to the purchase of value-added digital contents/services which are of use in mobile phones. The use of such prepaid value for the purchase of other goods or services will not be permitted.
    • Entities having Foreign Direct Investment: These companies must have a minimum capital as per the FDI policy guidelines

Capital Requirements For Eligible Entities

    • Banks and Non-Bank Finance Companies: The entities that meet the capital adequacy requirements prescribed by the RBI will be permitted to issue prepaid instruments. Such requirements must be fulfilled from time to time.
    • Companies: A financial entity registered under the Companies Act, 2013, with its primary objective of financial business looking for payment wallet authorization must have a minimum positive net worth of 5 crore.
    • FDI Entities: For entities governed under the Foreign Exchange Management Act (FEMA) who are authorized to issue a foreign exchange, prepaid instruments are exempt from the purview of these guidelines. Use of payment instruments shall be limited and permitted to current account transactions only and subject to the limits prescribed under the Foreign Exchange Management (Current Account Transactions) Rules, 2000, as amended from time to time.

Benefits of Having a Prepaid Wallet License

  • Prepaid Wallets can never be stolen or lost as they are safe inside the mobile, as physical wallet can sometimes be lost or stolen.
  • The problem of change money generally faced is removed in case of payments made through online prepaid wallets.
  • Even the online payments such as the internet banking need many details and in some banks, the amount can be transferred only after 24 hours or 12 hours of adding the beneficiary. There is no such problem in these wallets as money can be transferred instantly.
  • There is no or minimal extra cost for running these wallets. One does not need to pay activation fee, monthly charges or annual fees as in the case of IMPS in internet banking or the annual charge of debit cards.
  • These wallets also give incentives and rewards for referring to someone.
  • Loading money in these wallets is not at all a difficult task. Money can be added to these wallets through net banking, debit cards within a short span of time.
  • Auto pay facilities of these wallets works as a savior for working persons who usually forget their due payment dates.

Validity Period of Prepaid Wallet License/Payment Wallet License

  • All PPIs issued in the country shall have a minimum validity period of 1 year from the date of last loading / reloading in the PPI. PPI issuers are free to issue PPIs with a longer validity. 
  • Certificate of RBI Authorization shall be valid for 5 years, unless otherwise specified. However it shall be subject to review including the cancellation of Certificate of Authorization by RBI.
  • In case, the PPI is issued in the form of card (with validity period mentioned on the card), then the customer shall have the option to seek replacement of the card.
  • The outstanding balances in any payment instrument shall not be terminated immediately at the expiration, of the instrument. The value may be depleted at the rate of 10% of the outstanding value per month. The holders may also be adequately cautioned in advance as regards the expiry of the validity of the payment instrument


There are many benefits of prepaid wallets, and they have become the new age money transfer mechanism. These wallets can never be stolen or lost; it is a fast track method for transfer, and the maximum time for a transfer is 24 hours. They can be easily loaded and come with a lot of incentives on the increased spend on them. Also, there are no extra charges for the activation of such wallets.

Frequently Asked Questions

RBI reserves the right to authorize Payment Wallet License to Companies incorporated under Companies Act, 2013.

Payments Bank is classified in four categories as per the RBI norms:

• Closed system wallets;

• Semi-closed system wallets

• Open system Wallets; and

• Semi-Open Wallets.

Open system wallets are only approved for Banks and Non Banking Financial Companies (NBFCs).

Prepaid Wallets loading limit is maximum 50,000 per month that can be done using cash or electronic means.

Yes, if the co branding is taking place between companies that are in compliance with the Companies Act 2013.

If one partner is a bank, licensed by RBI and another is non-bank entity, then the Bank becomes the issuer of Payment Wallet License.

Yes, this facility is available for semi-closed and open system PPIs that are in compliance with FEMA that is authorized by category-1 banks. This is only enabled on the request of the PPI holder.

There are two types of Semi-closed PPI based on the details of PPI holder:

• Maximum Rs. 10,000/- if the minimum detail of the PPI holder is available.

• Maximum of Rs. 1, 00,000/- if the KYC of the PPI holder is available.

Minimum detail PPI requires the verified mobile number of the consumer, unique Identification number as per the Officially Valid Document (OVD) under PML Rules 2005.

Using Minimum detail Semi closed PPI one can:

• Reload the PPI up to Rs. 10,000/-

• Purchase goods and services up to Rs. 10,000/- in a month.

Yes, it is mandatory to obtain clearance for obtaining Payment Wallet License.